A business made 10 annual end-of-year purchases of Php1,000.00 of common stock. At the end of the 10th year, she sold all the stock for Php12,000.00. What interest rate did she obtain on her investment? a. 6% O b. 7% O c. 5% O d. 4%
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- A firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflowsare $0.35M indefinitely. If market demand for theproduct is low, then over the next five years thefirm will have the option of discarding the equipment on a secondary market for $2.2M. Assume thatMARR = 12%, s = 50%, and r = 6%. What isthe value of this investment opportunity for the firm?PMF, Inc., is equally likely to have EBIT this coming year of $10 million, $15 million, or $20 million. It's corporate tax rate is 40%, and investors pay a 10% tax rate on income from equity and a 40% tax rate on interest income. What is the interest tax shield if PMF has interest expenses of $5 million this coming year? A. $2 million B. $4 million C. $0.3 million D. $2.25 millionThe present value of JECK Co.'s expected free cash flow is $90 million. If JECK has $25 million in debt, $4 million in cash, and 3.8 million shares outstanding, what is its share price?
- 5 Mr. H Salt purchased an 1/8 interest in a producing oil well for $45,000. Recoverable oil reserves for the well were estimated at that time at 15,000 barrels, 1/8 of which represented Mr. Salt's share of the reserves. During the subsequent year, Mr. Salt received $12000 as his 1/8 share of the gross income from the sale of 1000 barrels of oil. From this amount, he had to pay $3000 as his share of the expense of producing the oil. Compute Mr. Salt's depletion allowance for the year.An investor made an investment of 55000 AED at the end of first year. He also made an investment of 7500DAED at the end of the third year. Lastly he made an investment of 90000AED at the end of the 6th year. If the profit rate is 5.5%, what equal annual investment he would have made for the same period instead of the 3 investments? 0 30224.70 AED O 36287.61 AED O 166577.86 AED O 34409.71 AED O 166246.31 AED3. Three months after borrowing money, David Tan pays on the interest of Php. 270.00. how much did heborrow if the simple interest rate is 5 ½ %
- A 10,000 Par Disney bond has a 4% coupon and will mature in 10 years. If its yielding (YTM) 5% when you buy it, and in 2.38 years you sell it when its yielding 4% what will be your sale proceeds (how much $$ will you get when you sell it? I'm not looking for your profit?Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? iii. What will be the market value of merged company (Cfood after the acquition of Tfood) under the cash offer?Cfood Co. is considering acquisition of Tfood Co. Some financial information on the two companies is given below (in $ million): Cfood Co. Tfood Co. Price per share 49 13 # of shares 10 2.5 Market value 490 32.5 If Cfood acquires Tfood, the operating cost (after-tax) can be reduced by $2m, and sales (after-tax) can be increased by $3m (the synergies) per year in perpetuity. The cost of capital is 19%. Cfood is considering two alternatives for the acquistion: 1. buying all the shares of Tfood at $15.6 per share. 2. issuing 1 shares for every 3 shares of Tfood Workout on this merger deal and answer the following questions. i. What is the economic gain from the merger? ii. What will be the NPV of merger under cash offer? v. What is the cost of merger under stock offering? Also compute the merger's NPV for Cfood's original shareholders. i. What is the economic gain from the merger? ii. What…
- What rent PSF would be needed to incentivize this development? Suppose new Class A Office developments cost $200 per square foot (psf), all in (i.e. land cost, construction, dev costs, reasonable dev profits) If the new building can be sold for $200 psf, development is feasible. Suppose investors are willing to pay $12.50 per dollar of (net operating) income on the building15) If money has a time value, then the future value will always be more than the original amount invested. Select one: True False 16) A series have the receipts in year 1 =$ 80000. If the Fees are expected to increase uniformly to a level of $200,000 in nine years. What is the possible value for the gradient? Select one: a. $20000 b. $ 15000 c. $ 30000 d. $ -20000 17) In a cash flow series regarding the gradient: Select one: a. Uniform gradient signifies that an income or disbursement changes by the same amount in each interest period b. Either an increase or decrease in the amount of a cash flow is called the gradient c. The gradient in the cash flow may be positive or negative d. All of the above is correctLewis’s management has been considering movingto a new downtown location, and they are concerned that these plans may come to fruition priorto the equipment lease’s expiration. If the moveoccurs then Lewis would buy or lease an entirelynew set of equipment, so management wouldlike to include a cancellation clause in the leasecontract. What effect would such a clause haveon the riskiness of the lease from Lewis’s standpoint? From the lessor’s standpoint? If you werethe lessor, would you insist on changing any ofthe other lease terms if a cancellation clause wereadded? Should the cancellation clause containprovisions similar to call premiums or any restrictive covenants and/or penalties of the type contained in bond indentures? Explain your answer.