A customer has 3 application options and wants to know which is the best option. - Savings that yield 17.0% a.m. - Short-term fund that yields 72.8% per quarter - CBD that yields 700% p.a.
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21 - A customer has 3 application options and wants to know which is the best option.
- Savings that yield 17.0% a.m.
- Short-term fund that yields 72.8% per quarter
- CBD that yields 700% p.a.
Step by step
Solved in 3 steps
- 13. hat Corp. establishing a fund where they pay $200 annually (ie. every year) into the fund. The interest rate thst the fund earns is an annual rate of 6%. What will be the balance of the fund at the end of the 5 years? Round to the nearest dollar. please also explain that formula(s) you used and variable inputs.GROW fund Charges a front end load of 5%, but has no 12B-1 fee an expense ratio of .25%. Assume the rate of return on fund portfolio (before any fees) is 9% per year. how much will an investment of $1000 in the fund grow to after 6 years?QuantAlpha fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.75%. Assume the rate of return on fund portfolio (before any taxes) is 6% per year. How much will an investment of $1000 in the fund grow to after 10 years?
- 1. You are an employee that earns 20,000 per month. Assuming that you want to invest half of the amount to be invested at the end of each month in a mutual fund that would grow at a rate of 6% for five years. How much would be the future value of this investment? 2. Assuming that you obtain a bank loan for 500,000 with an annual interest payment of 10% of the principal. Compute for the present value under the following independent scenarios: a. Effective rate is 10% b. Effective rate is 8% c. Effective rate is 12%Loaded-Up Fund charges a 12b-1 fee of 1.00% and maintains an expense ratio of 0.50%. Economy Fund charges a front-end load of 3.0%, but has no 12b-1 fee and an expense ratio of 0.25%. Assume the rate of return on both funds’ portfolios (before any fees) is 6% per year. How much will an investment of $1,000 in each fund grow to after: (Round your answers to 2 decimal places.) Laoded-up fund Economy fund 1 year 3 years 10 yearsElise Carlo is adapting the cost averaging in investment. She decided to invest in a mutual fund for 6 months with a monthly investment of P4,500.00. The initial shares price of the fund was listed at P200 then decreases by 5% every month for a year. Compute for the average price using cost-averaging method.
- Investment 1: Investing that $120,000 in a saving account for 15 years. There are two banks forher choice. Bank A pays a rate of return of 8.5% annually, compounding semi-annually. Bank Bpays a rate of return of 8.45 annually, compounding quarterly.Investment 2: Putting exactly an equal amount of money into ANZ Investment Fund at the endof each month for 15 years to get 330 000 she still shorts of now. The fund is offering a rate ofreturn 7% per year, compounding monthly. Calculate the amount of money Molly would accumulate in Investment 1 after 15 years if shechooses Bank B?Investment 1: Investing that $120,000 in a saving account for 15 years. There are two banks forher choice. Bank A pays a rate of return of 8.5% annually, compounding semi-annually. Bank Bpays a rate of return of 8.45 annually, compounding quarterly.Investment 2: Putting exactly an equal amount of money into ANZ Investment Fund at the endof each month for 15 years to get 330 000 she still shorts of now. The fund is offering a rate ofreturn 7% per year, compounding monthly.Required:a) Identify which Bank should Molly choose in Investment 1 by computing the effective annualinterest rate (EAR)? b) Calculate the amount of money Molly would accumulate in Investment 1 after 15 years if shechooses Bank B? c) How much is the annual interest rate, assuming compounding annually Molly should aim at ifshe chooses to invest her $120 000 in a saving account to get the $450,000 ready in just 10 yearsfrom now? d) Calculate the monthly payment Molly needs to contribute into ANZ Investment Fund to…Investment 1: Investing that $120,000 in a saving account for 15 years. There are two banks forher choice. Bank A pays a rate of return of 8.5% annually, compounding semi-annually. Bank Bpays a rate of return of 8.45 annually, compounding quarterly.Investment 2: Putting exactly an equal amount of money into ANZ Investment Fund at the endof each month for 15 years to get 330 000 she still shorts of now. The fund is offering a rate ofreturn 7% per year, compounding monthly.Required:a) Identify which Bank should Molly choose in Investment 1 by computing the effective annualinterest rate (EAR)?
- WACC AND OPTIMAL CAPITAL BUDGET Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Project Cost Expected Kate of Return 1 2,000 16.00% 2 3,000 15.00 3 5,000 13.75 4 2,000 12.30 The company estimates that it can issue debt at a rate of rd = 10%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of 5.00 per year at 50.00 per share. Also, its common stock currently sells for 38.00 per share; the next expected dividend, D1, is 4.25, and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. a. What is the cost of each of the capital components? b. What is Adamson's WACC? c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept?EQUIVALENT ANNUAL ANNUITY A firm has two mutually exclusive investment projects to evaluate. The projects have the following cash flows: Time Cash Flow X Cash Flow Y 0 (80,000) (75,000) 1 40,000 35,000 2 60,000 35,000 3 70,000 35,000 4 _ 35,000 5 _ 5,000 Projects X and Y are equally risky and may be repeated indefinitely. If the firms WACC is 10%, what is the EAA of the project that adds the most value to the firm? (Round your final answer to the nearest whole dollar.)
