A mining project requires the purchase of new drilling equipment at a cost of $69750. A further $31500 will be spent on transport, installation and initial maintenance of the equipment, at the very beginning of the project. Of this amount, 35% constitutes maintenance costs and will be written off in Year 1, and the remainder will be capitalised.   Excluding depreciation, what is the amount that will be claimed as tax deduction in Year 1?

Q: Amazon trade continuously. rate = 20-strike maturing shares currently ST 12.31. The compounded one…

A: Put call parity is used quite extensively to determine the option prices. Based on put call parity…

Q: A property costs $5 million. It will generate positive cash flows for years 1-15. Cash flow in year…

A: In given question, We required to calculate Net present value (NPV). Net present value (NPV) is the…

Q: Eastern Auto Parts Inc. has 20 percent of its sales paid for in cash and 80 percent on credit. All…

A: Solution:- Cash receipt budget is the budget prepared to forecast the upcoming cash receipts by the…

Q: Determine the monthly payment for a five-year fixed rate mortgage of $260 000 amortized over 25…

A: To calculate the monthly payment we will use the below formula   Monthly payment = PV/[1-(1+r)-n]/r…

Q: Reinsurance can be used by an insurer to solve several problems. Assume you are an insurance…

A: Reinsurance-It can be rightly termed as insurance of insurance. Under this process, the original…

Q: f you issue a thrifty year fixed rate mortgage to finance the purchase of a home you are locked into…

A: Mortgage It is a type of loan where borrower pays a series of fixed periodic payment. This periodic…

Q: D Plc is in the process of making a 1 for 4 rights issue. The rights letters have just been sent to…

A: Data given: Rights issue = 1 for 4  No. of existing  shares= 20,000,000 Current market price = K4.50…

Q: You're evaluating various investment opportunities and you have the following information about five…

A: The Sharpe ratio is used to measure the return of a portfolio that has been adjusted for risk. An…

Q: An electric utility is considering a new power plant in northern Arizona. Power from the plant would…

A: Given, The initial outlay is $269.87 The WACC is 16%

Q: Precision Cuts has a target debt-equity ratio of .48. Its cost of equity is 16.4 percent, and its…

A: To calculate the WACC we will use the below formula   WACC = (Ke*We)+[Kd*(1-t)*Wd]   Where Ke - Cost…

Q: What are the different arrangements for who pays the ongoing expenses related to a leased property?…

A: In this question, we will be discussing about different method of ongoing expenses related to a…

Q: The following data represents the prices (in R) of 50 items purchased by a shopper. Price (R)…

A: Mean, median, and mode A data set's mean (average) is calculated by adding all of the numbers in the…

Q: Adrian pays P718822 cash and the balance in 43 quarterly payments of P29243 for a house and lot. If…

A: A mortgage is a covered loan taken out for the purchase or maintenance of a property. It is covered…

Q: For the question below use the following figures which illustrate the production possibilities…

A: First let us calculate advantage of Farmer over the rancher.Farmer can produce 4 pounds of potato…

Q: or the following practice questions use these rates that your bank has quoted you:   EUR/USD:…

A: Given information from question   EUR/USD:        1.0175 – 1.0180 GBP/USD:        1.2065 – 1.2070…

Q: Foxtrot Inc., a Canadian, company, has just entered into a one year currency swap contract with a…

A: Swaps: Swaps are contracts are derivatives that are used to as a hedging tool. All swaps are…

Q: Risk aversion preference OA. True OB. False refers to an investor's for risky assets.

A: Risk aversion refers to the practice where an investor opts for investment with less volatility even…

Q: $4,250 was deposited at the end of every six months for 5 years into a fund earning 2.2% compounded…

A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…

Q: The Dragons (from CBC's Dragon's Den) are considering a venture from an Albertan entrepreneur. His…

A: Initial Investment is $500,000 Required return is 20% To Find: IRR of the project

Q: XYZ Company has bonds outstanding with 7 years left before maturity. The bonds are currently selling…

A: The effective interest rate that a corporation pays on its obligations, such as bonds and loans, is…

Q: What does the book value of debt and equity refer to? O A. The par values of common stock and the…

A: The par value of stock is the price which is usually set at when the stock is issued. It is present…

Q: Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make…

A: Introduction  Operating leases require lease expenses to be recognized on a straight-line basis over…

Q: A new diamond deposit has been found in northern Alberta. Your researchers have determined that it…

A: We will have to determine the NPV of all cash flows associated with this diamond deposit. If NPV of…

Q: The present value of $6,000 you will receive 3 years from today is $5,333.98, assuming a 4% interest…

A: We will use the concept of time value of money here. As per the concept of time value of money the…

Q: You've observed the following returns on Pine Computer's stock over the past five years: 10 percent,…

A: Data given: Year Return % 1 10% 2 -10% 3 17% 4 22% 5 10% Average inflation  rate…

Q: Microsoft has an Expected Return of 44%, and standard deviation of 24%. Wal-Mart has a expected…

A: Expected return of Microsoft is 44% Standard deviation "SD" of Microsoft is 24% Walmart's standard…

Q: Colossus Company has the ability to obtain debt financing at 10 percent. It currently has $2,000,000…

A: Given: Cost of debt = 10% tax rate = 25%

Q: A company is looking to raise funds by issuing                   commercial paper with a face value…

A: Face value (FV) = $1,000,000 Maturity days (d) = 110 Interest rate (r) = 0.03 Value of commercial…

Q: Northwest Utility Company faces increasing needs for capital. Fortunately, it has an Aa3 credit…

A: Weighted cost of the capital includes the weighted cost of debt, weighted cost of equity and…

Q: A 30-year mortgage requires payments of $5,455.84 at the end of each month. If interest is 3.23%…

A: Data given: PMT= $5455.84 Interest = 3.23%  (compounded semi-annually) n=30 year nper=30*2 = 60…

Q: According to the tax legislation, there are two main types of tax statuses regulated on the basis of…

A: Data given: Income Scales (TRY) Rate (%) Up to 14,800 15 14,801 - 34,000 20…

Q: Sara purchased a three-bedroom, two-storey house for $209 000 with a 10% down payment. The mortgage…

A: The down payment refers to the money paid by the customer in the early stage of purchasing the…

Q: Amazon's Housing Equity Fund is supporting the construction of housing for low to moderate-income…

A: As per press reports the Amazon Housing Equity Fund is mainly focused in Washington State’s Puget…

Q: Pessimus stock's rate of return over the past 5 years was: 5%, -2%, 10%, 12%, -8%. What was its…

A: Return of year-1 = 5% Return of year-2 = -2% Return of year-3 = 10% Return of year-4 = 12% Return of…

Q: Question 4: The General Hospital is evaluating new office equipment offered by three companies.…

A: Interest Rate = 20%N = 4 years

Q: River Valley Production Inc. seeks to increase its market share and improve its results. The company…

A: Given: Particulars 2018 2019 Accounts receivables $199,000 $305,000 Sales   $2,150,000…

Q: Explain why a company might issue convertible securities instead of straightforward debt or equity.…

A: Convertible security is an instrument , usually a bond or a preferred stock, that can be converted…

Q: What are the different types of expected return and related risk, for individual assets and for…

A: The different types of expected return and related risk, for individual assets and for portfolios as…

Q: A project with a life of 6 years is expected to provide annual sales of $380,000 and costs of…

A: Given: Particulars Base case Sales $380,000.00 Cost $269,000.00 Tax rate =21%

Q: a. Advance payments of $25,000 every six months for 5 years b. Payments of $9,000 quarterly for 4…

A: Present value is the concept of the time value of money. Which states future cash flow is less…

Q: Work out the value of European Call on a risky asset A, currently selling at $600. The European Call…

A: Using Black Scholes we can compute the value of the call option. The formula is as follows:C = S…

Q: Company A has provided figures for two investment projects, only one of which may be chosen. These…

A: Payback period: It helps to find out the time period  required to recover the investment made in the…

Q: Find the equivalent replacement payments for the following scheduled payments. Original Scheduled…

A: The concept of the time value of money states that between the same amount available now and…

Q: Use AW analysis. Texas Popcorn Corporation is planning to fully automate it process. The company CEO…

A: Annual Worth is one of the methods of comparing alternatives by calculating the equivalent uniform…

Q: 8. Determine the amount that would have to be invested to provide 200 dollars interest at the end of…

A: Simple interest is the  quick and the straightforward way to calculate the interest on the loan.…

Q: b-1. After considering the hedging, what is the net cost to the firm of the increased interest…

A: a. Profit on future contract = Value per contract * % it goes down * number of contracts

Q: Curtis bought a condominium for $319 000 and made a down payment of $64 000. The annual interest…

A: Loan amount (L) = $255,000 (i.e. $319,000 - $64,000) Monthly interest rate (r) = 0.004575 (i.e.…

Q: All rates in this question are quoted with semi-annual compounding. You observe two spot rates. The…

A: The forward rate determines the effective yield of a security. It is calculated as the rate for the…

Q: Advice the Directors of Access Business Enterprise Limited how the capital market can help the firm…

A: The business needs capital to fund the operation, The business can raise funds in various ways like…

Q: Citywide Courier Services projects that demand for its services will rise for a period of three…

A: present value refers to the current value of an asset based on some future date. The money present…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.