A 1987 advertisement in the New Yorker solicited offers on a 1967 Mercury Cougar XR7 (Motor Trend's 1967 car of the year) that had been stored undriven in a climate controlled environment for 20 years. If the original owner paid $4000 for this car in 1967, what price would he have to receive in 1987 to obtain a 10 percent annual return on his investment?
Q: Use a calculator to evaluate the amortization formula. For the values of the variables, P, r, and t...
A: Amortization refers to the technique by which loan is repaid by making regular payments in installme...
Q: 1. If you invest in a $1,000 bond and pay a price of $832, and the coupon rate on the bond is 4%, wh...
A: Given information: Par value of bond is $1,000 Current price of bond is $832 Coupon rate is 4%
Q: Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital struct...
A: After tax cost of bond= Before tax cost of bond * (1-tax rate)
Q: Suppose that the cost of borrowing restricted euros is7% annually, whereas the market rate for these...
A: Currencies can be restricted or free-floating. A free-floating exchange can derive its value from c...
Q: O 2.34 O 2.255 O 2.19 O 0.13
A: While choosing which investment will be undertaken, different appraisal techniques are used. Techniq...
Q: Imagine you have a business, you are selling a one of a kind gadget, the cost you incurred for the m...
A: Contribution per unit = sell price per unit - cost per unit
Q: Step 2 of the visual inspection method of preparing the statement of cash flows reads: For each ____...
A: Cash flow can be seen in two of the financial statements, one in the Cash flow statement and the oth...
Q: Pfa question
A: Net present value (NPV) is the difference between the present value of cash inflows and the present ...
Q: Mowbot Company is evaluating the production of a new part. It would require the acquisition of aspe...
A: Capital budgeting is a process of determining whether the investment projects like purchase of new e...
Q: Lubbock, Inc., produces furniture and has no international business. Its major competitors import m...
A: Lubbock Inc has no international business, thus directly it wont be effected by the strengthens of b...
Q: Project II is an inventory-control system, with an IRR of 10.60% & a beta of 0.90. Incredible Co...
A: IRR is the rate of return when npv of the project is zero. Selection desicion in case of IRR : SELEC...
Q: Kyoko is the owner of a 15-year-old home, and is looking to buy a homeowner's insurance policy. She ...
A: Hello. Since your question has multiple parts, we will solve first question for you. If you want rem...
Q: Critically analyse a company capital structure and the factors that influencesit.
A: Introduction: Capital structure is nothing but the debt and securities that are included in the comp...
Q: A couple needs $45,000 as a down payment for a home. If they invest the $30,000 they have at 4% comp...
A: Future Value = Present Value * (1+r)^n Where, r =rate per period i.e. 4%/4 = 1% n = no. of quarters ...
Q: St. Thomas Company is planning to issue $1,000 par value bonds. The bonds will have a coupon rate o...
A: A financial instrument with a fixed cost that helps a company to raise funds for business operations...
Q: The Pan American Bottling Co. is considering the purchase of a new machine that would increase the s...
A: Net present value = present value of future cashflows - initial cost IRR is the rate at which NPV i...
Q: A newspaper is considering buying locked vending machines to replace open newspaper racks in the dow...
A: a. NPV = -75 + (12/r)*[ 1-1/(1+r)^N] At Internal rate of return, NPV=0 75 = (12/r) * [1-1/(1+r)^N] P...
Q: When will the prime rate go up and what factors drive it?
A: The prime rate is the best interest rate you can get, and it's influenced by the economy. In order...
Q: Imagine you have a business, you are selling a one of a kind gadget, the cost you incurred for the m...
A: The formula used as follows: Break even =Fixed costContribution
Q: If you purchase $26,000 in U.S. Treasury Bills with a discount rate of 4.9% for a period of 26 weeks...
A: Given information: Face value is $26,000 Discount rate is 4.9% Number of periods is 26 weeks
Q: D.) Two common stocks, consolidated Edison and Apple have the following expected return and standard...
A: EXPECTED RETURN OF PORTFOLIO FORMULA: rp=w1×r1+w2×r2where,w1= weight of stock 1r1= return of stock 1...
Q: Given the following information, compute the current and quick ratios: Cash $ 90,000 Accounts...
A: The current ratio of a firm measures its ability to pay its short-term liabilities. It is a measure ...
Q: Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's ...
A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of ...
Q: Suppose Hampton Corporation sells land for $8,000,000. Hampton paid $5,000,000 for the land several ...
A: After-tax cash flow is the amount that is arrived after net of taxes paid on the receipt of any amou...
Q: Net working capital:A.can be ignored in project analysis because any expenditure is normally recoupe...
A: Introduction: Net working capital is nothing but the balance amount left after subtracting the total...
Q: JenBritt Incorporated had a free cash flow (FCF) of $84 million in 2019. The firm projects FCF of $2...
A: The present value is the value of the sum received at time 0 or the current period. It is the value ...
Q: A payday loan is made for six weeks, where the amount of the interest owed per $100 borrowed is $20....
A: Payday loan: This is a short-term borrowing method where a high interest is charged to the borrower ...
Q: Find the present value of $375 due in the future under each of the following conditions. Do not roun...
A: A theory that helps to compute the present or future value of the cash flows is term as the TVM (tim...
Q: 2.3 You have been provided with the following options. a. A 10-year, R1000 face value, 10 percent co...
A: “Hey, since there are multiple questions posted, we will answer first question. If you want any sp...
Q: Chapter 11, Question 5. This is a follow up from previous question
A: According to CAPM model: ke=rf+beta×rm-rfwhere,ke= cost of equityrf= risk free raterm= market return
Q: On January 1, 20x1, MamaMia Co. acquired 12%, P4,000,000 bonds at 98. Commission paid to brokers amo...
A: The effective rate of interest is the rate that makes the present value of all the remaining cash fl...
Q: You foresee five possible economic scenarios across a holding period during which you invest in Exxo...
A: The expected return is the amount of profit or loss that an investor can expect to have on the inves...
Q: Chapter 11, Question 2
A: Select the combination which gives the highest NPV. A- Winter coats only = 95000 B- Summer sandals &...
Q: VioletRichGold Company has been growing at a rate of 6 percent for the past two years, and the compa...
A: Dividend is the amount which is paid by a firm to their shareholders for the amount invested by them...
Q: Amazing Manufacturing, Inc., has been considering the purchase of a new manufacturing facility for $...
A: Cash flows are the cash generated from the operation of the business organisation. In other words, t...
Q: 4. Introduction to real options Consider the following statement about real options: Decision ...
A: Part 1- Decision tree analysis is more commonly used in valuing securities than real assets. - The ...
Q: Q4. What is the cash value of a three-year lease of That require payments of $2097.64 payable at the...
A: PV computes the existing value of future benefits by discounting future benefits with a given intere...
Q: Answer all the subparts a,b,c.if answered within 45mins,it would be helpful!!! Problem 20.2 On Tuesd...
A: Put option is an option to sell the shares at the predetermined price on a predetermined day. The op...
Q: Chapter 11, Question 7
A: 1. EXCEL CALCULATION: YEAR TOTAL CASHFLOW FORMULA 0 -9842383 -9267383-575000 1 2922000 29220...
Q: A project was budgeted at $1,000,000. Meanwhile, the project is executed, and the following current ...
A: The formula used as follows: EAC=Actual cost+Budget-Earned value
Q: Which of the following would likely encourage a firm to increase the debt in its capital structure? ...
A: There are two correct options for the question. a) Increase in corporate tax rate would mean that by...
Q: Hi. I am studying for the Financial Investments exam. I have a question regarding the solutions manu...
A: Standard deviation is a measurement for the volatility of a portfolio. It measures the riskiness ass...
Q: For the car loan described, give the following information. A newspaper advertisement offers a $9,00...
A: APR or Annual Percentage Rate is the interest rate that is charged to borrowers and paid to investor...
Q: How much will you need to save per month to have $200,000 after 12 years, if your account earns 5% i...
A: The formula used as follows: Future value of annuity=Payment×1+rn-1r
A 1987 advertisement in the New Yorker solicited offers on a 1967 Mercury Cougar XR7 (Motor Trend's 1967 car of the year) that had been stored undriven in a climate controlled environment for 20 years. If the original owner paid $4000 for this car in 1967, what price would he have to receive in 1987 to obtain a 10 percent annual return on his investment?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- A grape producer is studying the possibility of installing an irrigation system on his property. He estimates that he will have to pay $60,000 for the purchase and installation of the equipment. The system has a very long lifespan that can be considered infinite. However, the supplier informed that the owner must carry out a general overhaul of the entire system every five years, indefinitely, to keep it in ideal operating conditions without compromising its efficiency. And, each revision is estimated to cost $5,000. For an interest rate of 12% per annum. What is the total value of the investment, at present value, to be made by the entrepreneur in the project?Your company, Dawgs “R” Us, is evaluating a new project involving the purchase of a new oven to bake your hotdog buns. If purchased, the new oven will replace your existing oven, which was purchased seven years ago for a total installed price of $1 million. You have been depreciating the old oven on a straight-line basis over its expected life of 15 years to an ending book value of $250,000, even though you expect it to be worthless at the end of that 15-year period. The new oven will cost $2 million and will fall into the MACRS five-year depreciation class life. If you purchase the new oven, you expect it to last for eight years. At the end of those eight years, you expect to be able to sell it for $100,000. (Note that both ovens, old and new, therefore have an effective remaining life of eight years at the time of your analysis.) If you do purchase the new oven, you estimate that you can sell the old one for its current book value at the same time. The advantages of the new oven are…Your company, Dawgs "R" Us, is evaluating a new project involving the purchase of a new oven to bake your hotdog buns. If purchased, the new oven will replace your existing oven, which was purchased seven years ago for a total installed price of $1million. You have been depreciating the old oven on a straight-line basis over the expected life of 15 years to an ending book value of $250,000, even though you expect it to be worthless at the end of that 15-year period. The new oven will cost $2million and it will fall into the MACRS five-year depreciation class life. You cannot use bonus depreciation or Section 179 expensing on the new oven. If you purchase the new oven, you expect it to last for eight years. At the end of those eight years, you expect to be able to sell it for $100,000. (Note that both of the ovens, old and new, therefore have an effective remaining life of eight years at the time of the analysis.) If you do purchase the new oven, you estimate that you can sell…
- The heat loss through the exterior walls of a processing plant is estimated to cost the owner $3,000 next year. A salesman from Superfiber, Inc. claims he can reduce the heat loss cost by 80% with the installation of $15,000 of Superfiber now. If the cost of heat loss rises by $200 per year, after next year (gradient), and the owner plans to keep the building ten more years, what is his rate of return, neglecting depreciation and taxes Show complete solution pls. No excel computationCisco Systems is purchasing a new bar code–scanning device for its servicecenter in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 25% of the hardware cost. Solve, a. What is the BV of the device at the end of year three if the SL depreciationmethod is used? b. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the doubledeclining balance depreciation method for the remainder of the device’s life (the remaining three years). What is the device’s BV at the end of four years?A company is considering establishing a new machine to automate a meat packing process. The machine will save $50,000 in labor annually. The machine can be purchased for $200,000 today and will be used for a period of 10 years. It has a salvage value of $10,000 at the end of its useful life. The new machine will require an annual maintenance cost of $9000. The corporation has a minimum rate of return of 10%.Do you recommendautomating the process? Use all methods discussed in evaluating a single project.
- An $80,000 baling machine for recycled paper was purchased by the XYZ company two years ago. The current MV of the machine is $50,000, and it can be kept in service for seven more years. MARR is 12% per year and the projected net annual receipts (revenues less expenses) and end-of-year market values for the machine are shown below. When is the best time for the company to abandon this project?An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $30,000 the first year, but process improvements will allow the costs to decline by $3,000 each year. As an alternative, an outside company will process the wastes for the fixed price of $15,000/year throughout the 10-year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 10 years. Use the annual worth method to determine how the wastes should be processed. The company’s MARR is 10%.A company is being offered a special coating for the gasoline underground tank in installing in its service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of the special coating will increase the cost of the P 40,000 – tank to P 58,000. Cost of installation for either of the tanks is P 24,000. If the salvage value for both is zero, and the interest rate is 26%, would you recommend the use of the special coating?
- "The heat loss through the exterior walls of a certain poultry processing plant is estimated to cost the owner $4000 next year. A salesperson from Superfiber Insulation, Inc., has told you, the plant engineer, that he can reduce the heat loss by 70% with the installation of $20000 worth of Superfiber now. If the cost of heat loss rises by $30 per year (uniform gradient) after the next year and the owner plans to keep the present building for 14 more years, what is the present worth of the savings? Would you recommend installing the insulation now given that the interest rate of 7.68% year?" A 255986.64 B 316901.03 C 24457.35 D 222355.62 E 207412.21Suppose that you purchased industrial equipment that requires special software to run the machine. The licensing agreement calls for a $20,000 payment immediately and $10,000 every other year to renew and get any update on the software. If the machine is to be kept for 48 years, determine the total equivalent cost in present worth at an interest rate of 10%.Nelson Electronics, Inc., just purchased a soldering machine to be used in itsassembly cell for flexible disk drives. This soldering machine costs $150,000.Because of the specialized function it performs, its useful life is estimated to be six years. At the end of that time, its salvage value is estimated to be $20,000. What is the capital cost for this investment if the firm's interest rate is 15%?