A company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs.20000 each, and have a life of five years. The company’s required rate of return is 10% and pays tax at a 35% rate. The projects with be depreciated on a straight – line basis. The before taxes cash flows expected to be generated by the projects are as follows. Before-tax cash flows (Rs.) Project1 2 3 4 5 A 8000 8000 8000 8000 8000B 12000 6000 4000 10000 10000 calcualte for each project: The NPV and the internal rate of return. Which project should be accepted and why.

Q: . The City of Cebu plan to improve the water system distribution of the city. The estimated cost f t...

A: When a bond is issued, the issuer is obliged to pay two payments- a) Coupon payment at the end of ev...

Q: Ladders, Inc. has a net profit margin of 5.2% on sales of $50.6 million. It has book value of equity...

A: The rate of the return on assets is the percentage rate which provides the percentage of the earning...

Q: West Wind, Inc. has 4,900,000 shares of common stock outstanding with a market value of $90 per shar...

A: Market capitalization = Number of shares outstanding x market value per share             = 4,900,00...

Q: A firm is considering an investment opportunity. At a discount rate of 10%, the project has a positi...

A: IRR = Lower Interest rate + (Higher Interest rate - Lower Interest rate) * Lower NPV / (Higher NPV -...

Q: Belinda invested a sum of money for her two-year-old child education in the amount of fifty thousand...

A: Compounding is a strategy for calculating the future value (FV) of current cashflows using a mention...

Q: A packaging employee making $14 per hour can pack 400 bags of chips during that hour. The direct mat...

A: Hourly cost of labor = $14 Number of bags per hour = 400 bags Labor cost per bag = 14/400 = $ 0.035 ...

Q: What will $248,000 grow to be in 12 years if it is invested today in an account with an annual inter...

A: Future Value = P(1+r/n)^ntWhere P = Principal = $248,000R = Rate on interest = 15%N = number of time...

Q: A P 10,000 bond, redeemable at par in 20 years, pays bond interest annually at 9.5%. If it is callab...

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Q: Leonardo, a senior executive at the Las Vegas Home Bank, either offers only low-risk prime mortgages...

A: Here, Under Original Compensation Scheme, L will receive 1% of the Banks Profit or Nothing in case o...

Q: 4. Sovereign-Tea Company projected to make even monthly cash payments of P150,000 during the year. T...

A: Total annual payments (T) = P 150000 * 12 = P 1800000 Fixed cost (F) = P 250 r = 8%

Q: A company has to select one of the following two projects: Project A 25,000 Project B 23,000 Cost Ca...

A: First cost = C Cash flows in year n = CFn Let r = IRR

Q: Money borrowed today is to be paid in 8 equal payments at the end of each quarter. If the interest i...

A: Quarterly payment (Q) = P 37291 n = 8 payments r = 1% per annum = 0.25% quarterly

Q: National Co. recently reported sales of P100 million, and net income equal to P5 million. The compan...

A: AFN is a tool for determining how much money a company will require in the future. This strategy wil...

Q: 10. We have the following exchange rates. $1.58/E1, $1.30/€1, and €1.40/E1. What will be the profit ...

A: From third relation, 1 Pound = 1.40 Euro  

Q: 32. A student plan to deposit P1,500 in the bank now and another P3,000 for the next 2 years. If he ...

A: The effective interest rate connected with an investment or loan is described by the effective yearl...

Q: Locust Software sells computer training packages to its business customers at a price of $101. The c...

A: Hi, Thanks for the Question. Since you asked multiple sub parts question, we will provide the soluti...

Q: 3 years.  Calculate the capitalized cost if an annual maintenance of P 590,000 is required. Express ...

A: Given information : Rate of interest 7.50% Bridge cost 200 Time period  23 Partial cost  14...

Q: · Given the following cash flows, determine the equivalent uniform cash flow at 9% interest. Draw th...

A: Interest rate (r) = 9% We need to find the PV of cashflows first.  

Q: Calculating Future Values Assume you deposit $1,000 today in an account that pays 8 percent interest...

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Q: (c) ACE SIMPLE COOL COMPOUND Simple interest at 2.1% per year Compound interest at 2% per year Pietr...

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Q: Bettis Corporation issued 7 percent bonds 3 years ago with 22 years until maturity.  The coupons are...

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Q: Lala Ltd's stock is currently selling for $5 per share. Lala Ltd paid $0.5 dividend and has growth r...

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Q: National Co., 65% owned by National Holdings Group, provides screening, diagnostic and therapeutic s...

A: D0 = P 0.14 D1 = P 0.14(1.15) = P 0.161 D2 = P 0.14(1.15)^2 = P 0.185 D3 = P 0.14(1.15)^3 = P 0.213 ...

Q: Tyrone invested a sum of money 10 years ago in an account that paid 2.25% per year compounded quarte...

A: Answer -  Formula for Future Value Calculation =  FV  = Principal / ( 1+i ) t Therefore,  Formula fo...

Q: 6. A concrete pavement on a street would cost P 20,000 and would last for 5 years with negligible re...

A: Present worth = Initial cost + Old surface removal cost after 5 year / (1+interest rate)^5 = 20000 +...

Q: 2. Mala-Inse Company sells its products on account payable in 30 days from the date of sale. Custome...

A: Percentage of customers who pay in 10 days = 40% Percentage of customers who pay in 45 days = 60% Sa...

Q: An amount of P 250,000 is deposited now into a savings account that earns 8% per year. This amount w...

A: Perpetuity is the stream of cash flows or payments that are made at equal intervals that do not have...

Q: find the monthly payment and total interest paid (B) suppose the family decides to add an extra $100...

A: Mortgage can be defined as a type of loan where the borrower borrows money from the lender to purcha...

Q: xplain the difference between (a) stand-alone risk and (b) risk in a portfolio context. How are they...

A: Stand-alone Risk and Portfolio risk are different from each other in the manner they are determined ...

Q: Jerome borrows ₱75,000 from the bank that advertises a 8% of simple interest rate and repays the loa...

A: Annual percentage Rate (APR) refers to an interest charged on an amount that is earned by investors.

Q: Using AFN formula in financial forecasting approach, given the following accounting information assu...

A: AFN or Additional fund needed is also referred to as the external financing needed. It is that amoun...

Q: (Related to Checkpoint 5.2) (Future value) Leslie Mosallam, who recently sold her Porsche, placed $1...

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Q: Consider the following statement: "If you are 20 years of age and save $1.00 each day for the rest o...

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Q: Mauna Enterprise produces shoes for overseas market. The company produces 30,000 units of total outp...

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Q: Harding Company is in the process of purchasing several large pieces of equipment from Danning Machi...

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Q: For one lump sum FV, the PV of your future liquidity decreases a. as t increases. b. as t decreases....

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Q: how much will the bond value increase over the next three years?

A: Answer Given N = 20, PMT =1000*5%= 50, FV = 1000, I/Y = 6.5%, CPT PV = -834.72.

Q: Use the table for the questions below.   Consider the following balance sheets:   PharmPic   D...

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Q: mium of $1.03. A put option with exercise price of $25 has a premium of $4.83. If David uses these t...

A: Given information : Number of shares 100 Stock market price  $   33.67 Call option exercise p...

Q: A bond with a par value of P 100,000 and with a bond rate of 9% payable annually is to be redeemed a...

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Q: Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoid pay...

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A: The question is related to Average Collection period. The Average Collection period or Days Sales Ou...

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A: Note : As per the guidelines, only first question will be answered. Kindly post the remaining parts ...

Q: If you have $4500 to invest now, and will need a total of $25,000 -- 10 years from now, determine ho...

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Q: onsider the following four alternatives: i. £132 received in two years ii. £160 received in five y...

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Q: Jessica buys a 5-year, $1,000 par value, 4% coupon bond. Exactly 3 years after purchasing the bond, ...

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A: A bond is a debt instrument that promises to pay back the principal along with some interest.

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.