A machine cost P25,000 ten years ago. If the rate of inflation for the first 4 years is 6% and 9% on the years thereadter, find the cost of the machine now assuming that the cost in price was due to inflation only. Using this formula F=P(1+f)^n.
Q: 6, 6. Assuming annual compounding, what's the YTM of a portfolio with one Bond A and one Bond C7…
A: Solved using Financial Calculator CF Mode: CF0 = (-100 + - 92) = -192 C1 = (15 +9) = 24 F1 = 2 C2…
Q: Roberts Company is considering an investment in equipment that is capable of producing more…
A: Payback period Payback period is a capital budgeting tools to decide on which capital project is…
Q: Paige refinanced her home loan. The new loan of $85,000.00 has an interest rate of 3.7% compounded…
A: i) Monthly Payment: Solved using Financial Calculator PV = - 85,000 I/Y = 3.7/12 = 0.3083333333 N =…
Q: Thomson Media is considering some new equipment whose data are shown below. The equipment has a…
A: NPV is the difference between present value of all cash inflows and initial investment. NPV =PV of…
Q: Ideal Living Company has 8.5 percent bonds outstanding that are paid semi-annually and has the YTM…
A: A Bond refers to an instrument that represents the loan being made by the investor to the company…
Q: Cooper Industries is considering a project that would require an initial investment of P235,000. The…
A: Solution:- Internal Rate of Return (IRR) is the rate of return which the project is yielding. At…
Q: condensed financial statements of Vaughn Company for the years 2021 and 2022 are as follows.…
A: Note: As per Bartleby guidelines,If a question with multiple sub-parts are posted, first 3…
Q: Bond valuation-Semiannual interest Find the value of a bond maturing in 12 years, with a $1,000 par…
A: Par Value of Bond is $1,000 Time to maturity is 12 years Coupon rate is 11% Coupon frequency is…
Q: Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows…
A: 1a) Net Present Value =Sum of the present value of cash inflows-Present value of cash outflows.…
Q: By iset (BBS) is considering the purchase of two new hot air balloons so that it can expand its…
A: Answer - Part 1 - Calculation of Accounting rate of Return- Particular Amount Intial…
Q: If Trey opens an account with $7,500 and plans on depositing $1,500 every year-end, how much will he…
A: We will use the concept of time value of money here. As per the concept of time value of money the…
Q: a. Calculate each project's NPV. Round your answers to two decimal places. Do not round your…
A: NPV refers to net present value. It is one of the important tools in the domain of capital budgeting…
Q: The approach by Borjas (2003) on evaluating the effects on immigration ignores: (a) Cross-wage…
A: Beyond liberalizing the immigration system, an immigration tariff would have a favorable economic…
Q: LO2 Evaluate whether a project is acceptable.
A: Acceptability of the project can evaluated: 1) Net Present Value: Net present value is the…
Q: The Taylors agreed to monthly payments rounded up to the nearest $100 on a mortgage of $175000…
A: Here, Loan Amount is $175,000 Interest Rate (r) is 6.75% Compounding Period(m) is Semi Annual i.e 2…
Q: sembly operation at a software company now requires $100,000 per year in labor costs. A robot can be…
A: In this given case, operating cost and Maintenance and operation expenses are to be written off in…
Q: he college tuition is expected to increase with an average of 5% per year for the next 5 years. The…
A: We will use the concept of time value of money here. As per the concept of time value of money the…
Q: The Monetary Base of the Bank of Canada includes
A: In the world of finance and banking monetary base is also known as M0. Bank of Canada is the central…
Q: Use a calculator to evaluate the amortization formula m = P r n 1 − 1 + r n −nt for the…
A:
Q: to gan at expiration Apple stock sells for £55, then the option holder could acquire the Apple share…
A: Call Option: It is a contract that gives the buyer the option the right to buy the security at a…
Q: A hydraulic lift is purchased for a warehouse for $60,000. This lift is expected to generate $7000…
A: Rate of Return on Investment = Net income/Total Investment Depreciation Expense = Cost of the…
Q: Farley Inc. has perpetual preferred stock outstanding that sells for $44 a share and pays a dividend…
A: Formula Required rate of return = Annual dividend/Current stock price Where Stock price = $44 Annual…
Q: Olsen Outfitters Inc. believes that its optimal capital structure consists of 55% common equity and…
A: Equity required = 55% x 5.6 = 3.08 mn Debt required = 45% x 5.6 = 2.52 mn From the equity portion…
Q: Torch Industries can issue perpetual preferred stock at a price of $72.00 a share. The stock would…
A: FORMULA Cost of preferred stock = Annual dividend/Stock price Where Annual dividend = $7.00…
Q: Skeng would like to receive equal instalment of $250,000 at the end of each year for the next 8…
A: FORMULA PVA = P*[1-(1+R)-N]/R Where PVA - Present value of annuity P - Annual payment amount i.e.…
Q: In analysis of projects, Elucidate on the six major objectives of financial analysis
A: Given, Meaning of Financial analysis:- For the determination of the suitability and the performance…
Q: What are the different cases or instances under the New Civil Code when the debtor shall lose every…
A: A debtor, also known as a debitor, is a legal entity that owes a debt to another. An individual, a…
Q: Stocks A and B have the following returns: (Click on the following icon o in order to copy its…
A:
Q: TABLE 4 You are considering a new product launch: Equipment for the project will cost $875,000 The…
A: Net present value is the difference between Present Value of cash Inflows and Initial Investment. A…
Q: Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can…
A: As requested by the student we will calculate the last two parts which are 3 and 4. We will…
Q: ie inte ernational Monetary Fun (IMF) and the World Bah (WB) have similarities except: O a. Share…
A: World Bank(WB) and International Monetary fund(IMF) are both international agencies having…
Q: Marta purchased a home with an adjustable rate mortgage. The margin on an adjustable-rate mortgage…
A: A Loan refers to the amount of money taken by one party named borrower from the other party named…
Q: Management action and stock value REH Corporation's most recent dividend was $1.79 per share, its…
A: An investor in equity shares buys the shares at fixed fair price. The fair price is the price which…
Q: Find the total proceeds (in $) from the sale of 20 bonds with a coupon rate of 8.75 and a current…
A: Bond: It is is an obligation security that is sold by huge business firms and government bodies to…
Q: A. Cash sales B. Payment of Wages C. Purchase of machinery D. Credit sales
A: Cash budget for month would include the cash payment or that involves immediate cash payments. The…
Q: Project L requires an initial outlay at t = 0 of $45,000, its expected cash inflows are $11,000 per…
A: FORMULA NPV = [CF*(1-(1+R)-N)/R]-CF0 Where NPV - Net present value CF - Annual cash inflow i.e.…
Q: 8 GoldPure is considering the following independent, average-risk investment projects: Project…
A: The plowback ratio is a fundamental analysis metric that determines how much profit is kept after…
Q: JaiLai Cos. stock has a beta of 0.8, the current risk-free rate is 6.6 percent, and the expected…
A: Formula Cost of equity = Risk free rate+[Beta*(Market return-Risk free rate)] Where Risk free rate =…
Q: The following expected return and the standard deviation of current returns are known: Security…
A: The standard deviation is a measure of the consistency of returns of an investment. The standard…
Q: A man borrowed an amount of P150,600 to bank that offers an interest rate of 5.36% compounded…
A: Loan is an amount of money that is borrowed and is expected to be repaid in the future with…
Q: How much should be invested at 6% to have $1900 at the end of 4.5 years? (Round your final answer to…
A: FORMULA Investment amount = FV/(1+R)N Where FV - Future value i.e. $1900 R - Interest rate i.e. 6% N…
Q: 4 Last year Alice worked as a consultant. She hired an administrative assistant for $17,000 per year…
A: Solution:- Accounting Profit means the profit earned in monetary terms, while on the other hand,…
Q: What is a lower bound for the price of a nine-month European call option on a non-dividendpaying…
A: Given: Spot price = $75 Strike price = $70 Risk free rate = 8% Period = 9 months
Q: re the problems Bangladesh can face in currency market due to current condition in
A: There are problem the world over going on due to the which there there are too much fluctuations in…
Q: 6,000,000 apartment complex loan is to be paid off in 10 years by making 10 equal annual payments.…
A: We need to use present value of ordinary annuity formula to calculate yearly payment PMT…
Q: How much would you have (to the nearest dollar) when you retire if the account pays 3% compounded…
A: Future Value of Annuity: It is the future worth of the company today and is computed by the product…
Q: Cool Runnings Corp. plans to construct a building after 5 years. The Chief Financial Officer…
A: We need to use present value formula to calculate the amount of cash need to invested today. Present…
Q: How much money did he have for retirement?
A: Future Value of Annuity: It is the future worth of the present annuity stream cash flows and is…
Q: The annual term structure of interest is (6%, 6.3%, 6.7%, 7%, ... ) and the 3-year deferred 2-year…
A: 3-year deferred 2-year forward rate = 7.8% 1st Year rate = 6% 2nd Year rate = 6.3% 3rd Year rate =…
Q: You receive $100 today, $200 in one year, and $300 in two years. If you deposit these cash flows…
A: Formula FV = CF0*(1+R)3+CF1*(1+R)2+CF2*(1+R)1 Where FV - Value of account after 3 years R - Interest…
A machine cost P25,000 ten years ago. If the rate of inflation for the first 4 years is 6% and 9% on the years thereadter, find the cost of the machine now assuming that the cost in price was due to inflation only.
Using this formula F=P(1+f)^n.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- The average cost of a certain model car was $22,000 ten years ago. This year the average cost is $35,000. (a) Calculate the average monthly inflation rate (fm) for this model. (b) Given the monthly rate fm, what is the effective annual rate, f, of inflation for this model? (c) Estimate what these will sell for 10 years from now, expressed in today’s dollars.Ten years ago, an item cost Php2,500. The rate of inflation for the first 4 years was 4%, during the next 3 years 6% and for the last 3 years 9%. Assuming that the increase in price were due to inflation alone, what is the average inflation rate during the 10 years?1. You are promised an 8-year streams of income from buying a new technology at the initial amount of P 40,000.00. If the income increases by 3%, 4%, 5% and 6% respectively from the 2nd to 5th year then return to initial amount from the 6th to the 8th year, what is the present value of stream of income if the current interest prevailing is 6.5%? 2. You bought a new machine worth P 345,000.00. Research on this machine showed that it will reduce cost of production in the following sequence: Year 1 = P 22,500; Year 2 = P27,300; Year 3 = 30,500.00; Year 4 = 32,450 and Year 5 = 29,600. If the current interest rate is 7.2%. Should the machine be bought?
- A machine costs $5240 and produces benefits of $1000 at the end of each year for 8 years. Assume an annual interest rate of 10%. (a) What is the payback period (in years)? (b) What is the breakeven point (in years)? (c) Since the answers in (a) and (b) are different, which one is “correct”?A given item now costs of ₱2,000. The cost of this item in 2years time is ₱2,247.00. The inflation rate per year is __.The following material costs are anticipated over a 5-year period: $9,000, $11,000, $14,000, $18,000, and $23,000. It is estimated that a 4% inflation rate will apply over the time period in question. The material costs given above are expressed in then-current dollars. The time value of money, excluding inflation, is estimated to be 7%. Determine the present worth equivalent for material cost using the following: a. Then-current costs. b. Constant-worth costs.
- The unit price of personal computers, measured in constant dollars, is expected to decrease at an annual rate of 10%. However, the number of microcomputers purchased by the company is expected to increase over a5-year period at an annual rate of 30%. The unit price of a personal computer is currently $2,000. This year the company will purchase 100 microcomputers at the current price. Using a real interest rate of 8% and an inflation rate of 6%, determine the following: a. The yearly expenditures for personal computers over the 5-year period, measured in constant-worth dollars. b. The yearly expenditures for personal computers over the 5-year period, measured in then-current dollars. c. The single sum equivalent at the end of the current year of the expenditures on microcomputers over the 5-year period, measured in current dollars. d. The future worth equivalent of the expenditures on microcomputers at the end of the 5-year period, measured in then-current dollars.suppose a new car today costs $18,000. If annual inflation for cars over the next 10 years is 3.2%, what is the cost of a similar new car in 10 years?How much can the manufacturer of superconducting magnetic energy storage systems afford to spend now on new equipment in lieu of spending$75,000 four years from now? The company’s real MARR is 12% per year and the inflation rate is 3% per year.
- The Wildwood Widget Company needs a milling machine for its new assembly line. The machine presently costs $85,000, but has a cost inflation rate of 2%. Widget will not need to purchase the machine for 3 years. If general inflation is expected to be 4% per year during those 3 years, determine the price of the machine. What is the present worth of the machinery if the market rate of interest for Widget is 25%?An operation manager expects that the new machine will generate the following streams of income: Year 1- Ᵽ 13, 240.25; Year 2 - Ᵽ 15, 780; Year 3 - Ᵽ18, 990.95; Year 4 - Ᵽ21, 500.50; Year 5 - Ᵽ25,000.00. What is the present value of these future payments if the assumed interest rate is 3.7% ? If a new technology can reduce the future cost of production in 6 years at the following rate: Ᵽ8,550, Ᵽ10,200, Ᵽ13,600, Ᵽ 15,000, Ᵽ12,500, Ᵽ9000 what is present value of the future cost of production assuming that the interest is 6.33%? If the cost of the new technology in Item No. 2 is Ᵽ 52,435.60, what is the net present value? Should you buy or not the new technology?Revenue from a project is expected to be $7000 per year in real terms (i.e. an identical project would earn $7000 in revenue today). If the expected inflation rate is 2.4%, what is the nominal value of the annual revenue (the actual number of dollars received) 8 years from now? Question 4Answer a. $8462 b. $8666 c. $8264 d. $8070