1. The better alternative between the first increment is ________________. 2. The better alternative between the second increment is ________________
Q: Assume that you run a regression on the raw returns of the stock of Company J against the raw…
A: Jensen's Alpha is a measure of a stock's risk-adjusted performance, which compares the stock's…
Q: A person wants to invest $16,000 for 2 years and is considering two different investments. The first…
A: Holding Treasury stock can provide companies with flexibility and strategic options, while…
Q: The effective rate of interest compounded quarterly is given by i(m)/m. What is m? Write your answer…
A: Quarterly compounded effective rate of interest implies that rate of interest is compounded every…
Q: Financial arguments for the MD to improve health and safety 7 What financial arguments could you use…
A: Health and safety refers to the measures taken to ensure the physical, mental, and emotional…
Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option…
A: When the lender offers a loan to the borrower, he charges an interest rate on the borrowed amount…
Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option…
A: When considering loan options, there are several factors to consider in order to make an informed…
Q: Suppose the risk-free is 5 %, the average investor has a risk aversion co-efficient of A = 2, and…
A: Market risk refers to the uncertainty or volatility associated with the overall stock market or a…
Q: To insure you, Assurances Nochance Ltd offers the following plan: you will pay 20 annual…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: You find a bond quote online listing a bond's price as "100.0". The bond's current price is $
A: Bonds are debt instruments issued by companies. A bond usually has a face value of $1,000
Q: A 20-year, $1,000 par value zero-coupon rate bond is to be issued to yield 9 percent. Use Appendix B…
A: Step 1 ZERO COUPON BOND Bonds with zero coupon rates do not accrue interest throughout the course of…
Q: every year into perpetuity. The firm currently has no debt, but it can borrow at 10% per annum. The…
A: Firm Value: It represents the sum of all the creditor's claims & shareholders. It can be…
Q: Stock FM has a standard deviation of 24.7 percent and a correlation coefficient of 0.57 with market…
A: Standard deviation of stock = 24.7% Correlation coefficient = 0.57 Standard deviation of market…
Q: Calculate the dividend yield on OPQ stock. Earnings per share (EPS) are $2.75, and the quarterly…
A: Dividend Yield: A financial ratio represents how much income is earned in dividend payouts each…
Q: Assume that you run a regression on the raw returns of the stock of Company J against the raw…
A: Jensen’s alpha is an important metric in the world of investments. This metric shows the quantum of…
Q: Consider the following variance-covariance matrix for Security A, Security B, and the Market:…
A: The portfolios with the best balance of risk and return are shown on the capital market line. It is…
Q: The Fitness Studio, Incorporated's income statement lists the following income and expenses: EBITDA…
A: Taxable income = EBIT-Interest expense Taxable income = $535000-$70000 = $465,000
Q: Some recent financial statements for Earl Grey Golf Corp. follow. Current assets Cash Accounts…
A: Step 1 A financial ratio, also known as an accounting ratio, is the difference in magnitude between…
Q: i bought a painting for $5000. it is expected to appreciate at a rate of 4%. how much will it be…
A: In order to understand the appreciation on the assets it is important considered that the operations…
Q: Your job pays you only once a year for all the work you did over the previous 12 months. Today,…
A: The future value of a growing annuity is the value of a series of cash flows that increase at a…
Q: The following is true of deposit insurance, except Depositor no longer has incentives to…
A: Deposit insurance is used to refer to the guarantee provided to protect the savings of the…
Q: Identify a key factor that has contributed to the efficiency of financial planning in the bank…
A: Financial planning in the bank channel refers to the process of providing financial advice and…
Q: Set up expressions initially with functional notation like P/F,i,n 1. The owner of a small business…
A: Present value = pv = 40,000 Time = t = 2 years Interest rate = 7%
Q: You are borrowing $250,000 to buy a house, using a standard, 30-year mortgage. Your mortgage lender…
A: A mortgage is a covered loan taken out to purchase a property with the property itself acting as…
Q: Set up expressions initially with functional notation like P/F,i,n 1. The owner of small business…
A: Here, Amount Borrowed is $40,000 Interest Rate is 5% Annual Instalments is $21,512.20 To calculate…
Q: You work for an outdoor play structure manufacturing company and are trying to decide between the…
A: Calculation of incremental IRR using excel: The incremental IRR IS 2.49%.
Q: Please divide the period into two subperiods: before and after the pandemic. This will set the…
A: An international energy firm called Shell Global works in the oil and gas sector. It is one of the…
Q: Payback comparisons Nova Products has a 4-year maximum acceptable payback period. The firm is…
A: Step 1 The term "payback period" refers to the number of years needed to recoup the initial monetary…
Q: Problem 5.b, what is the internal rate of return (IRR) of project A? (Do not add the % sign to your…
A: Internal rate of return is the method of capital budgeting. It is used to evaluate the return on the…
Q: A 40-year-old woman decides to put funds into a retirement plan. She can save $3,000 a year and earn…
A: The concept of time value of money will be used here. As per the concept of time value of money the…
Q: c. What is the value of this futures contract on February 17 if the spot price turns out to be $90…
A:
Q: 4. What is the present value (PV) of a 12-year lease arrangement with an interest rate of 7.5% that…
A: The PV of an investment refers to the value of its cash flows after they have been discounted at an…
Q: WHAT IS AN ACCOUNT TITLE?
A: An account title is a descriptive name or label given to an account to help identify and classify it…
Q: 1) comment on banks’ and insurance companies’ behaviour and identify main drivers of their…
A: Many internal and external factors have an impact on banks and insurance businesses, influencing…
Q: A used car dealer has a vehicle on the lot whose sticker price says $6999. If the dealer markup on…
A: Sales Price in Cost Plus Mark up method = Cost + Cost * Markup
Q: Explain the concept of immunization within a portfolio management context. How can immunization be…
A: Introduction: Portfolio management refers to the process of managing an investor's investments,…
Q: You are set to receive an annual payment of $11,000 per year for the next 16 years. Assume the…
A: An annuity is a type of security that pays a periodic amount over a period of time. When the…
Q: Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index.…
A: Step 1 A portfolio that has been perfectly balanced between risk and return is said to be optimal.…
Q: Dec com futures closed today at $5.76 and you buy three (3) $5.80 put options for $0.47. Because of…
A: Corn option trading insights refer to information, analysis, and understanding that can help traders…
Q: What are the portfolio weights for a portfolio that has 125 shares of Stock A that sell for $82 per…
A: A portfolio refers to a collection of financial assets such as stocks, bonds, cash, and other…
Q: Related to Checkpoint 13.3) (Forecasting revenues using scenario analysis) Floating Homes, Inc. is a…
A: A company sells its products in order to generate revenue. The number of units sold and the price…
Q: Melissa Gutt is thinking about buying some shares of EZLawn Equipment, at $41.63 per share. She…
A: Intrinsic Value: It represents the actual worth of financial security. One of the common ways of…
Q: Use the following information to answer the next 3 questions. QTC Inc is a firm that just earned…
A: In the given case, we have provided the risk free rate , beta and the market risk premium . So,…
Q: A financial analyst is attempting to assess the future dividend policy of Environmental Systems by…
A: Here,
Q: Suppose the government decides to issue a new savings bond that is guaranteed to double in value if…
A: Present value of Annuity The future cash flow is discounted to determine the present value of an…
Q: If Walmart (WMT) recently earned a profit of $5.10 per share and has a P/E ratio of 16.25. The…
A: In the given case, we have given the current earning per share and the growth rate . So, using the…
Q: An analyst evaluating securities has obtained the following information. The real rate of interest…
A: Bond/T-bill yield represents the investor-realized rate of return. Where the return is higher, the…
Q: Venice Surf Co. expects to generate free cash flows over the next three years of $22 million, $31…
A: Here, FCF in Year 1 is $22 million FCF in Year 2 is $31 million FCF in Year 3 is $42 million…
Q: You invested $250 at the end of every month for 10 years at 7.5% interest compounded monthly. Use…
A: An annuity is a series of equal periodic payments made or received over a specified period of time.…
Q: You can afford monthly deposits of $300 into an account that pays 4.2% compounded monthly. How long…
A: monthly deposits = p = $300 Interest rate = 4.2 / 12 = 0.35% Future value = fv = $7700 Time = t =…
Q: The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are…
A: On a company's revenue statement, Net Income is stated. It stands for the company's remaining…
Any suggestions? Thanks for the help!
Given the data for three different alternatives in the table below, determine the best alternative using the incremental
A B C
First cost $15,000 $25,000 $20,000
O &M Cost/ year 1,600 400 900
Benefit/year 8,000 13,000 9,000
Salvage value 3,000 6,000 4,600
Life in years 4 4 4
1. The better alternative between the first increment is ________________.
2. The better alternative between the second increment is ___________________.
Step by step
Solved in 4 steps with 3 images
- Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?Which alternative should be selected using the incremental rate of return analysis, if MARR =11.0%? Do- nothing A B C D First Cost 0 $10,000 $4000 $10,000 $7000 Annual benefit 0 1,806 828 1,880 1,067 Life 10 Years ROR 12.5% 16.0% 13.5% 8.5% a. B, because its ROR is the highest b. Something other than C, because C costs the most initially c. C, because the C-B increment has a ROR of 11.78% and the A-B increment has a ROR of 10.5% d. C because C has the highest annual benefit
- For the following table, assume a MARR of 15%per year and a useful life for each alternative of eightyears which equals the study period. The rank-orderof alternatives from least capital investment to greatestcapital investment is Z → Y → W → X. Completethe incremental analysis by selecting the preferredalternative. “Do nothing” is not an option. (6.4)FE PRACTICE PROBLEMS 307Z → Y Y → W W → X! Capital −$250 −$400 −$550investment! Annual cost 70 90 15savings! Market 100 50 200value! PW(15%) 97 20 ???(a) Alternative W (b) Alternative X(c) Alternative Y (d) Alternative ZThe following mutually exclusive investment alternatives have been presented to you.Please help to solve all the below :) What is the average return per year for a project that has an initial investment of $75,000 with an average return of $12,000 per year over 10 years? a) $1,080 b) $10,800 c) $4,500 d) $11,000 e) $3,200 Based on previous answer, what is the Return on investment (ROI) of this project? a) 8.5 b) 6 c) 4 d) 5.5 e) 3 Which of the following best describes a cost-bound project? a) A project that is constrained by a hard deadline in which the delivery timing is as important as the delivery itself b) A project that is constrained by safety standards in which the safety aspect of the project is as important as the delivery itself c) A project that is constrained by a hard budget in which the cost of the project is as important as the delivery itself d) A and C e) All of the above What would be the discount factor at year 3 of a 4-year project, if the discount rate is 6%? a) 0.78 b) 0.84 c) 0.89 d) 0.96 e) None of the aboveFor the following two alternatives, if the MARR is 10% per year (a)which one has a shorter payback period (b) which one do you select if you use the PW analysis. (c) is your selection different in (a) and (b)? Why? (d) use Spreadsheet to solve a and b. Alternative A: initial cost = $300,000 Revenue = $60,000 Alternative B: initial costs = $300,000 Revenue starts from n=1 at $10,000 and increases by $15,000 per year The expected life is 10 years for each alternative.
- You have two projects that met the payback period and accounting rate of return screeningsidentically. Project 1 produced an NPV of Php 450,000 and had an IRR between 5% and 8%.Project 2 produced a NPV of Php 350,000 and had an IRR of 10%. This leaves you with a difficultchoice, since each alternative has a measurement that exceeds the other and the other variablesare the same. Which project would you invest in and why?Use the following data to answer questions (a) to (d). Show your working method.A company is considering the purchase of a copier that costs RM 50,000. Assume the required rate of return is 10% and the following is cash flow schedule: Year 1: RM 20,000 Year 2: RM 30,000 Year 3: RM 20,000 (a) What is the project’s payback period?(b) What is the project’s NPV?(c) What is the project’s IRR?(d) What is the project’s profitability index (PI)?Szechwan Gardens, Inc. has been thinking about further expansion of thebusiness. They have $40,000 available to spend. If the required rate of returnis 9%, which of the following should be selected for investment? Assume thatall options have a 7-year life and a PW analysis is preferred.
- A $1,000 investment in project that returns $100/year for 5 years is to be compared with a $700 investment in a project that returns $90/year for 4 years. What would be a good metric(s) for comparing these projects? A. Equivalent uniform annual cash flow, only. B. Internal rate of return (only correct choice of these options) C. Internal rate of return and equivalent uniform annual cash flow D. Benefit to cost ratio and internal rate of return E. Benefit to cost ratio (only correct choice of these options) Give answer fast and only type answerThe Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow(I) Cash Flow(II) 0 –$ 55,000 –$ 18,900 1 25,000 10,150 2 25,000 10,150 3 25,000 10,150 a-1 If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.) a-2 If the company applies the profitability index decision rule, which project should the firm accept? Project I Project Il b-1 What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2 If the company applies the NPV decision rule, which project should it take? Project I Project IIA project has initial costs of $3,000 and subsequent cash inflows of $1350,275,875 and 1525 . The company's 10% cost of capital is an appropriate discount rate for this average risk project. Calculate the following: NPV IRR Profitability Index Please number/label each of your answers as shown above. Be sure to show your TVM function calculator inputs, and four decimal places.
