Annual worth method Future worth method E.R.R Method E.R.R.R method 9 of alternatives are shown in the table below 9
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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
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- The B.T. Knight Corporation is considering two mutually exclusive pieces of machinery that perform the same task. The two alternatives available provide the following set of after-tax net cash flows: Year Equipment A Equipment B 0 ($3,100) ($3,380) 1-3 1,426 1-4 1,204 NPV at 11% 385 355 1. Determine which model should be purchased using the Replacement Chain (RC) method. 2. Calculate the equivalent annual annuity (EAA) for each model.Approximately, what is the value of the total Present worth (where Ptotal= PA + PG) if G (arithmetic gradient) =160, n=2 years, A=240 and i= 2.5% per year? Select one: a. 738 b. 511 c. 615 d. 825 not use excelFair value of plan asset, January 1, 2014 2,000,000Total actual return on plan asset: Interest income – actual 200,000 Gain on remeasurement 100,000 300,000Tax rate on defined benefit 15%Expected rate of return on the asset 7%Discount rate 6%Contribution during the year 500,000 What is the fair value of the plan asset as of December 31, 2014?
- Compare three alternatives on the basis of their capitalized costs at i = 13% per year and select the best alternative. Alternative E F G First Cost $-85,000 $-325,000 $-825,000 AOC, per Year $-65,000 $-20,000 $-6,000 Salvage Value $25,000 $75,000 $500,000 Life, Years 2 4 ∞ The capitalized cost of alternative E is $ , alternative F is $ , and alternative G is $ . The best alternative is E G F .Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year revenue/ product s revenue/ product v0 (150,000) outlay (150000) outlay1 14000 150002 24000 253333 44000 520004 84000 63333 Calculate the IRR for Product V only using 1% and 17% to 2 d.p.Ken derived the following in the year 2021:(i) Rental surplus of $5,000 from Property 1.(ii) Rental deficit of ($6,000) from Property 2.(iii) Interest income of $12,000 from maturity of fixed deposit placement with DBS Bank, an approved bank in Singapore.(iv) Commission of $10,000 from brokering a property rental arrangement.What is Ken’s taxable income for Year of Assessment 2022? Group of answer choices a) $9,000. b) $10,000. c) $21,000. d) $27,000.
- The goodwill of Blue Devil Inc. is $1,200,000. What’s the amortization expense per year? Group of answer choices $100,000 Do not do amortization $1,200,000 $1The following information relates to two projects of which you have to select one to invest in.Both projects have an initial cost of $400,000 and only one can be undertaken.Project X YExpected profits $ $Year 1 160,000 60,000Year 2 160,000 100,000Year 3 80,000 180,000Year 4 40,000 240,000Estimated resale value atthe end of year 4 80,000 80,000i) Profit is calculated after deducting straight line depreciationii) The cost of capital is 16%Required:a) For both projects, calculate the following:i) The payback period to one decimal place ii) The accounting rate of return using average investments iii) The net present value iv) Advise the board which project in your opinion should be undertaken, givingreasons for your decision.Compare the alternatives shown on the basis of their capitalized costs using a MARR of 10% per year. Alternative M N First cost, $ −195,000 −750,000 Annual operating cost, $ per year −70,000 −11,000 Salvage value, $ 8,000 1,000,000 Life, years 5 ∞ The capitalized cost for alternative M is $− , and the capitalized cost for alternative N is $− . The best alternative selected on the basis of their capitalized costs is alternative
- Brendan & Kelly purchased an item valued at $147,000. They paid $22,050 down and financed the rest at 2.8% compounded annually. To reduce the amount owing to $32,490 at the end of 3 years, what size of equal payments must Brendan & Kelly make at the end of each three months? Enter the present value as a positive value in the PV box below. Enter PMT and FV as positive or negative values based on PV being positive. Report PMT accurate to the nearest cent. P/Y = C/Y = N = I/Y = PV = PMT = FV= The size of each equal payment is (enter a positive value) $ .__________________Determine which alternative, if any, should be chosen based on Annual Worth method using 15% MARR. Use Repeatability Method. Note: Show final answer to the nearest WHOLE NUMBER and show complete solution Answer the following: a. The Annual Worth of Alternative A is = $ Blank 1 b. The Annual Worth of Alternative B is = $ Blank 2 c. Choose Alternative (Type only A or B) = Blank 3William and Raj Company provided the following information for the year:Projected benefit obligation - January 1 P 700,000Fair value of plan assets - January 1 560,000Pension benefits paid during the year 50,000Current service cost for the year 350,000Past service cost for the year (vesting period 5 years) 85,000Actual return on plan assets 36,000Contributions to the plan 300,000Actuarial loss due to change in assumptions on projected benefit obligation 40,000Discount or settlement rate 10%Expected return on plan assets 12%1. What is the employee benefit expense for the current year?2. How much is the actuarial gain/loss on return on plan assets?3. What is the prepaid/accrued balance of the pension at yearend?4. How much is the defined benefit cost?5. If the pension benefits paid during the year is worth P50,000 but the company was able to pay only P45,000, what would be the employee benefitexpense for the current year assuming the above given is the same?