Finances
Answer the following questions:
1. The Lexington Property Development Company has a $10,000 note receivable from a customer due in three years. How much is the note worth today if the interest rate is a. 9%? b. 12% compounded monthly? c. 8% compounded quarterly? d. 18% compounded monthly? e. 7% compounded continuously?
SOLUTION: PV = FV [PVFk,n] a. PV = $10,000 [PVF9,3] = $10,000 (.7722) = $7,722 b. PV = $10,000 [PVF1,36] = $10,000 (.6989) = $6,989 c. PV = $10,000 …show more content…
Note: In parts c and d, be sure to give your answer as the annual nominal rate.
SOLUTION: FV = PV [FVFk,n] a. $555 = $500 [FVFk,1] FVFk,1 = 1.1100 k = 11% b. $2,078.66 = $1,850.00 [FVFk,2] FVFk,2 = 1.1236 k = 6% c. $1,114.46 = $750.00 [FVFk,20] FVFk,20 = 1.4859 k = 2% knom = 8% d. $21,364.24 = $12,500.00 [FVFk,36] FVFk,36 = 1.7091 k = 1.5% knom = 18%
4. How much will $650 per year be worth in eight years at interest rates of a. 12% b. 8% c. 6%
SOLUTION: FVA = PMT [FVFAk,n] a. FVA = $650 [FVFA12,8] = $650 (12.2997) = $7,994.81 b. FVA = $650 [FVFA8,8] = $650 (10.6366) = $6,913.79 c. FVA = $650 [FVFA6,8] = $650 (9.8975) = $6,433.38
5. What would you pay for an annuity of $2,000 paid every six months for 12 years if you could invest your money elsewhere at 10% compounded semiannually?
SOLUTION: FVA = PMT [FVFAk,n] $279,600 = $7,500 [FVFAk,15] FVFAk,15 =

Finance
1352 Words  6 Pagesfinancial manager differ from the traditional financial manager? Does the modern financial manager's role differ for the large diversified firm and the small to medium size firm? The traditional financial manager was generally involved in the regular finance activities, e.g., banking operations, record keeping, management of the cash flow on a regular basis, and informing the funds requirements to the top management, etc. But, the role of financial manager has been enhanced in the today's environment;…

Finance
3830 Words  16 Pagesany other outcomes. This theory has no consideration of other dimensions of investment decisions like social, environmental, personal or strategic (Edwin and Martin, 1997). There have been various option pricing models developed for the field of finance, with the basic ones as Black Scholes and Binomial models. Black Scholes assumes that the investors are neutral for risks factors. The main key to application of the model is realizing where the options occur. If a real option can result in an unfavourable…

Finance
1137 Words  5 PagesMASTERS IN BUSINESS ADMINISTRATION MAY/2015 BMMF5103 MANAGERIAL FINANCE Q1: The role of a financial manager requires both an understanding of how the business functions as a whole and specialized financial knowledge. The head of the financial operations is called the chief financial officer (CFO). Financial managers develop strategies that will implement the longterm goals of a corporation. Their main goal is to maximize the value of stock shares. Stockholder wealth…

Finance
3453 Words  14 PagesAnnual Report and Form 20F Information 2012: 1 (b) Business structure and financial structure (comparison and relative advantages of the chosen organization) 5 (c) Compare and comment on the finances of business: 7 (d)Recommend potential investor for the investment decision: 8 (e)All possible Sources of finance for 500000 and best source 8 (f) Management of working capital: 10 Task 2: 11 (a)Preparations of a cash flow forecast and comment on budget and cash flow: 11 (b)Recommendation for managing…

Finance
4387 Words  18 Pagesprojects. The projects are identical, except one is on the west coast of Tasmania and the other on the east coast. Both companies have analysed their respective investments whose cash flows would be the same for both projects. No debt would be used to finance the projects. Both companies estimate that their project would have a net present value of $1.3 million at a 9.7% discount rate and a −$1.5 million NPV at a 12.7% discount rate. Aquaculture is riskier than horticulture, as fish in farms are very susceptible…

Finance
1176 Words  5 PagesDUKE UNIVERSITY Fuqua School of Business FINANCE 251F/351 Individual Assignment #1 Cost of Capital at Ameritrade Prof. Simon Gervais Spring 2010 – Term 1 In this case, you have to use data from comparables to estimate the cost of capital at Ameritrade. The process involves a few stages that this handout will guide you through. First, we need to determine which set of ﬁrms to use as comparable ﬁrms. You should try two diﬀerent sets. The ﬁrst set will include three discount brokerage ﬁrms: Charles…

Finance
5210 Words  21 Pages0.1 Introduction of Finance in your organization………………………….............. Task: 1: Be able to explore the sources of finance available to Sainsbury’s 1.1: Identify the sources of finance available to Sainsbury’s............................................ 1.2: assess the implications of the different sources of finance in Sainsbury’s…………. 1.3: select appropriate sources of finance for a project in Sainsbury’s………………….. Task: 2: Be able to analyses the implications of finance as a resource within a…

Finance
1074 Words  5 PagesCORPORATE FINANCE COURSE CORPORATE FINANCE 2.1 Working Capital Management Sept. 2014 Ir Frank W. van den Berg mba Vrije Universiteit, Amsterdam ALYX Financial Consultancy bv, Aerdenhout FWvdB/2014 1 OUTLINE CORPORATE FINANCE FWvdB/2014 • Basics & Guiding principles • Time value of money + Capital Budgeting • Valuation of CF + Bonds • Valuation of shares (+ co.’s) • Financial Analysis (Ratios) • Financial Planning (EFN) • à Working Cap. Mgt. (A/R,…

Finance
1067 Words  5 Pagescommon equity for the firm is 19.3%, the cost of preferred stock is 12.9% and beforetax cost of debt is 10.4%, what is Jowers’ cost of capital? The firm’s tax rate is 34% Jowers’ WACC is _% 4).(Weighted average cost of capital) As a member of the finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the firm’s present structure reflects…

The Finance
1054 Words  5 Pagesrequires intentional shortterm and longterm planning. More importantly, in order for capital management to be deemed successful, it is required that all members of an organization are on board. “Capital budgeting is not only important to people in finance or accounting, it is essential to people throughout the business organization”< /span> (Block, Hirt, & Danielsen, 2011). As the duration of the investment period increases, and the size of investment increases, the residual risk also increases…