Q: ome recent financial statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets as...
A: Net Income is $35,363 Depriciation is $5,333 Interest paid is $1,430 EBIT is $55,834 Short term liab...
Q: a couple has 25,000 in their retirement savings today. How many years do they have to save at 6%, pu...
A: Present Value The present value is the value of cash flow stream or the fixed lump sum amount at tim...
Q: Equipment costing P1M is expected to produce 10,000 pieces of pipes during its econpmic life before ...
A: Given Economic Life Price = 1M for 10000 pieces Annual Production = 2500 pipes Scrap value = 50,000 ...
Q: In four years of employment, John was able to save P250,000 after he had invested on purchasing a mo...
A: The stock market is a location where traders may purchase and sell equities,investors can invest in ...
Q: Current Prior Year Year Total Assets $ 2,731,792 $ 2,580,708 Total Liabilities $ 867,106 $ 957,022 T...
A: There is impact of capital structure of company on the earning of the company and valuation of the c...
Q: The firm had sales of $33 million, operating expenses of $14 million, interest of $4 million and pay...
A: Earnings before interest & taxes(EBIT) is the income generated by an entity before making paymen...
Q: The cost of discounts missed on credit terms 2/10, n/50 is (use 360 days)
A: Credit terms Credit terms are those requirements that are mentioned on an invoice that includes the ...
Q: On June 1, 2021, Java Company issued 10% bonás payable with face amount of P6,000,000 to yield 12%. ...
A: To Find: Market price of bond. Effective interest amortization table Journal entries for 2021 and 2...
Q: Manning Imports is contemplating an agreement to lease equipment to a customer for four years. Manni...
A: A lease is a written legal agreement between a two-party lessor and the lessee. In lease agreement l...
Q: A company plans to add an additional production line at an initial cost of $ 1,250,000 that will giv...
A: Initial Investment $ 12,50,000.00 Gross Savings $ 10,00,000.00 Annual operating cost $ 2,50...
Q: In order to accumulate $500,000 after 25 years, calculate the amounts that must be invested at the e...
A:
Q: The additional return over the risk-free rate needed to compensate investors for assuming an average...
A: Basis the general principle that higher risk security do have the higher returns, it is known that s...
Q: You want to buy a new sports coupe for $74,700 , and the finance office at the dealership has quoted...
A: The monthly payments is calculated by using fallowing formula Present value P = Present value ...
Q: Assume semi-annual payments. A bond has a coupon rate of 2.8% when yields are 4.33%. If the bond has...
A: Bond price is the present discounted value of its expected cash flow at the given interest rate. A b...
Q: Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $3....
A: Note : Since the Part d. and Part e. is being asked specifically to get solved , so we are solving t...
Q: You work in a company. You are offered the choice of two payments streams. A. $250 paid now. B. $150...
A: The interest rate that makes both option same will be the IRR of cash flows where cash outflow for y...
Q: Andres Michael bought a new boat. He took out a loan for $24,320 at 4.5% interest for 2 years. He ma...
A: Given, Loan amount is $24,320. Term is 2 years, that means 24 months.
Q: An investor takes a long position on an FRA that is based on 90-day LIBOR and has 6 months till expi...
A: A forward rate agreement is referred to those agreements that are made over-the-counter to determine...
Q: onsider a $15,000 loan to be repaid in equal installments at the end of each of the next 5 years. Th...
A: As per the guidelines in case of multiple question we are supposed to answer only the first question...
Q: Bon Chance, Inc., has an odd dividend policy. The company has just paid a dividend of $9.50 per shar...
A: In financial markets, it is a method of evaluating the intrinsic value of the stock. It is a compli...
Q: You are interested in buying a piece of real estate property that could be worth $450,000 in five ye...
A: The worth of property in five years represents the future value of the property. The present value o...
Q: are the treasurer for ABC corporation. You just received a bill from your Italian supplier of Genoa...
A: Exchange rates are very important in the international business it has large impact on the internati...
Q: What is true? a.EBIT and Operating Income are often used interchangeably b.If a firm records depreci...
A: The classified income statement has various parameters such as Gross income, EBITDA, EBIT, and Net I...
Q: a) Gerry likes driving small cars and buys nearly identical ones when- ever the old one needs replac...
A: Given, Cost of the car = $15,000 Depreciation rate = 30% (declining balance is used) Average Repair ...
Q: Transaction costs In late December you decide to sell a losing position that you hold in Twitter so ...
A: Bid/ask spread Bid/ask spread is referred to as that amount which is the difference between the high...
Q: What happens when N (d2) of the Black Scholes Morten Model is in the negative figure? What does this...
A: Following a lengthy search by financial economists for a viable option-pricing model. A formula for ...
Q: Melissa wants to retire with $45,000 per month.she needs $4,500,000 in principal at the time she ret...
A: Simple interest is computed by multiplying the daily interest rate by the principal and later by nu...
Q: What is the balance of Gabriella’s $3000 after 8 years?
A: Here, Present value = $3,000 Rate of interest = 2.2% Time in years = 8 years Frequency = continuous...
Q: If a firm is given a trade credit terms of 2/15, net 30, then the cost to the firm failing to take ...
A: Trade credit terms of 2/15, net 30 means the firm gets a 2% discount if it pays within 15 days. Othe...
Q: Consider a 1-factor parallel yield shift model with a flat structure of interest rates and consider ...
A: Duration of bond is the rate of change in price of bond with change in interest rate in the market. ...
Q: Statement of Cash , select the false statement a.The cash received from the sale of goods is a cash ...
A: A statement of cash shows the different sources of cash (i.e. cash inflows) and the different uses o...
Q: The entity received P7,580,000 cash from the issuance of its 9%, 3-year P8,000,000 par value prefere...
A: Face Value = 80,00,000 Current MV = 75,80,000 Rate = 9% Term = 3 years Annual Interest = 8000000*9% ...
Q: Steph creates a ratio spread by buying four 100-strike put options and selling one 110-strike put op...
A: A put option (or "put") is a contract that grants the option buyer the right, but not the obligation...
Q: Solve the following problems. Show your solutions on a separate sheet of paper. 1. Your father is co...
A: Since you have asked multiple questions, we will solve the first question for you. If you want any s...
Q: Consider a $30,000 loan to be repaid in equal installments at the end of each of the next 5 years. T...
A: Frist we need to use excel to calculate yealy payment of loan. The formula is =PMT(RATE,NPER,-PV)
Q: Showing your calculations, calculate the price of a $100,000 debenture bond that matures in 15 years...
A: The price of an asset is computed as the present value of the future cash flows associated with the ...
Q: The firm gets one-half of its capital from stock, and the other half from bonds. The debtholder’s re...
A: The weighted average cost of capital is the average cost of capital of a firm which is calculated fr...
Q: Discuss the following statement about hedging: “There is no such thing as a hedge. Any hedge is an a...
A: In any market there are three traders are available to play in the market namely, speculator, arbitr...
Q: a) What is the present value of the following payment series when the interest rate is 3% YR1 = $...
A: The present value is calculated by discounting all the future values of cash flows with the specifie...
Q: Consider two lotteries. Lottery A is such that an individual receives a prize of 1.25 units of a con...
A: The expected value is determined by multiplying the probability with its units. This is expected val...
Q: ABC PLC is an all equity financed company with 100 million shares outstanding trading at €2 per shar...
A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the questio...
Q: Jose and Rosa are looking for a condo. Their combined gross annual income is $61,000. The best mortg...
A: Gross Income = $61,000 Interest rate = 3.12% compounded semi-annual Time Period = 20 Years Annual pr...
Q: National Co. uses about 200,000 yards of a particular fabric each year. The fabric costs P25 per yar...
A: The total annual cost is the cost of all the product cost including fixed and variable both. The dif...
Q: KYY Inc. has the following data on its 2020 financial statement Total sales 2,000,000 360,000 1,500,...
A: Return on investment can be calculated in two ways, one is using amounts of what is received divided...
Q: Pielago has another excess fund amounting to P5,000,000. She is having difficulty whether to invest ...
A: Company requires funding for their investment which can be obtained from broadly two sources. Equit...
Q: A firm has directly placed an issue of commercial paper that has a maturity of 60 days. The issue so...
A: Let the maturity value = F Selling price (S) = P 980000 n = 60 days r = 12%
Q: You are given the following long-run annual rates of return for alternative investment instruments: ...
A: The real rate of return : The real rate is inflation adjusted rate of return. The real rate is the r...
Q: The firm is contemplating the following (base case): Vehicle acquisition cost ...
A:
Q: ow impotant is the time value of money and what is it that the time value provides
A: The time value of money is a very important concept in finance.
Q: Are government treasury bills good protection from inflation? Why?
A: TIPS (Treasury Inflation-Protected Securities) offers inflation protection. As assessed by the Consu...
Step by step
Solved in 3 steps with 3 images
- A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
- Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
- Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?
- Manzer Enterprises is considering two independent investments: A new automated materials handling system that costs 900,000 and will produce net cash inflows of 300,000 at the end of each year for the next four years. A computer-aided manufacturing system that costs 775,000 and will produce labor savings of 400,000 and 500,000 at the end of the first year and second year, respectively. Manzer has a cost of capital of 8 percent. Required: 1. Calculate the IRR for the first investment and determine if it is acceptable or not. 2. Calculate the IRR of the second investment and comment on its acceptability. Use 12 percent as the first guess. 3. What if the cash flows for the first investment are 250,000 instead of 300,000?How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one year and the rate is 10%?Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?