Dallus Car Rental costs $280,000. It is expected to generate a net income of $70,000 at the end of every year for 5 years. At the end of the 5 years, it has a salvage value of $60,000. What is the payback period of this business? Question options: 3.41 years 4.86 years 4.00 years 0.86 years 3.14 years
Q: In relation to a convertible arbitrage trade in general, carefully explain the impact of a potential…
A: Convertible arbitrage is an investment strategy that involves buying a convertible bond and…
Q: Using an interest rate of 8% compounded quarterly, in how many months from today should this payment…
A: First, we are going to discount every payment due to PV using the formula below: PV = CFn(1+r)nWhere…
Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…
A: Periodic payment refers to an amount that is paid at every period by the borrower to the lender for…
Q: Which of the following statement is true? a. Put-call parity holds for American options, just like…
A: The answer to the question is given below :
Q: You have Just won the lottery and will receive $490,000 in one year. You will receive payments for…
A: To calculate the present value we will use the below formula Present value =…
Q: Future value. Jack and Jill are saving for a rainy day and decide to put $40 away in their local…
A: Data given: PMT=$40 N=30 year Rate=10% Required: Future value at the end of 30 year.
Q: Given the following information: Percent of capital structure: Debt Preferred stock Common equity…
A: Cost of each source of capital is calculated below After tax cost of debt = Bond yield to…
Q: We are selling our temperature control beverage thermos at $18. This is a 40% profit margin. What…
A: Profit margin is a financial metric used to measure the profitability of a company or product. It is…
Q: You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high…
A: Rate of return on investment is the return expressed in percentage terms that is expected on the…
Q: Give only typing answer with explanation and conclusion An online store holds a sale. Of the 400…
A: Step 1 A coupon is a ticket or piece of paper that can be used to get a cash discount or rebate when…
Q: You have a mortgage of $120000 at j2 = 5%. You wish to make payments once every two weeks for 25…
A: The mortgage is a loan taken out for purchasing a property with the property itself acting as…
Q: Imagine a situation where there is a 40% chance of a $100 loss, a 40% chance of a $50 gain, and a…
A: Given: Probability P1 = 40% Return R1 = -$100 Probability P2 = 40% Return R2 = $50 Probability P3 =…
Q: Vandalay Industries is considering the purchase of a new machine for the production of latex.…
A: a) Machine A Annual depreciation=Purchase PriceUseful life=$2,140,0006=$356,666.67 The actual cost…
Q: Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It…
A: Issued bonds 1000000 Price $ 929.00 Face value $ 1,000.00 Coupon rate 3%…
Q: A graphic designer needs a laptop for audio/video editing, and notices that they can elect to pay…
A: Present value refers to the money received today being more valuable than the money will receive…
Q: you have just won the lottery and will receive $460,000 in one year. you will receive payments for…
A: The problem is related to Present value of growing annuity. Under which annuity payment (equal…
Q: Explain the term structure of interest rates and the relationships measured? Why is it important for…
A: Term Structure of Interest Rate: Also understood as the yield curve is a representation of interest…
Q: Suppose you know that a company's stock currently sells for $65.90 per share and required return on…
A: Stock price (P0) = $65.90 Required return (r) = 0.12 Dividend yield = 0.06 (i.e. 0.12 / 2) Capital…
Q: what are the the foreign exchange exposure of a multinational company with it's headquarters in…
A: Foreign exchange exposure refers to the risk faced by a multinational company of losing money due to…
Q: Which of the following are considered tax-sheltered annuity plans? Education IRAs Stock bonus…
A: A tax-sheltered annuity plan, also known as a TSA or 403(b) plan, is a retirement savings plan…
Q: You need to have $30,750 in 11 years. You can earn an annual interest rate of 6 percent for the…
A: To calculate the deposit amount we will use the below formula Deposit amount =…
Q: Liam plans to print the Scenarios section of the Loan Calculator Prepare for printing as follows:…
A: In the first scenario, Liam is considering borrowing additional money to renovate the Charles Street…
Q: 6. Sharon lives in Saskatoon. She wants to go to the West Edmonton Mall for a shopping trip with her…
A: Financial planning is the process of creating a roadmap to help you achieve your financial goals. It…
Q: Chelsea Menken, of Providence, Rhode Island, recently graduated with a degree in food science and…
A: The debt payments to disposable income ratio is the proportion of the disposable income of the…
Q: Harper, age 45, earns $300,000 annually from Atlas, which sponsors a SIMPLE, and the required non-…
A: A SIMPLE (Savings Incentive Match Plan for Employees) IRA is a type of retirement plan that is…
Q: You ran a little short on your spring break vacation, so you put $1,000 on your other credit card.…
A: Information Provided: Present value = $1000 Quarterly payment = $60 Interest rate = 18% compounded…
Q: Financial Performance Summary: Provide a brief summary of your financial analysis from the Financial…
A: Formulas for different ratios are shown below.
Q: Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different…
A: Compound interest is a type of interest where the interest earned on an initial principal amount is…
Q: Give typing answer with explanation and conclusion Dave borrowed $700 for one year and paid $49 in…
A: Step 1 A finance charge is a cost associated with using a credit or extending already existing…
Q: Calculate the Following: 2022 Revenue: $600,000 Net units sold in 2022: 3,000 access points 2022…
A: PAYBACK PERIOD Payback period is the period in which money invested in capital asset is recovered…
Q: Ron Sample is the grand prize winner in a college tuition essay contest awarded through a local…
A: For investment amount calculation we will use the below formula Investment amount =…
Q: A local finance company quotes a 17 percent interest rate on one-year loans. So, if you borrow…
A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…
Q: The Allens are considering buying a house and need to figure out what they can afford and what a…
A: Back-end Debt to Income ratio computes all monthly payments as a % of the gross monthly income. We…
Q: You have a Visa credit card account with a 20.98% annual percentage rate calculated on the average…
A: The daily balances on a credit card is summed up and the result is divided by the number of days in…
Q: Present value of an ordinary annuity. Fill in the missing present values in the following table for…
A: Present Value: It represents the current or present value of the future expected sum of the amount.…
Q: A contract requires lease payments of $800 at the beginning of every month for 6 years. a. What is…
A: The present value of an annuity due is the value of a series of equal payments that occur at the…
Q: Lottery. Your dreams of becoming rich have just come true. You have won the State of Tranquility's…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its pain-reliever…
A: Initial cost includes the cost of equipment, installation cost and increase in net working capital.…
Q: A loan of $4200 is due in 7 years. If money is worth 3.7% compounded annually, find the equivalent…
A: Note : As per the guidelines, only first question will be answered. Given information : Amount…
Q: Ken spent 1/4 of his money and an additional $6 on a number of CDs. He then spent 3/5 of the…
A: Let the amount now be “X’, Amount spent on CD is X/4+$6. Amount spent on magazine is “(X-X/4)*3/5 +…
Q: Imagine that you are a 65 year old woman and her husband has just retired with a combined retirement…
A: Time Value of Money states that a dollar earned today is more valuable than any time in the future,…
Q: Go to finance yahoo and search for bonds. Address the following about the bond that you select and…
A: There are various types of bonds, including: Government bonds: issued by national governments and…
Q: You have $12,457.52 in a brokerage account, and you plan to deposit an additional $5,000 at the end…
A: The Future Value of Ordinary Annuity refers to the concept which determines the sum total of all the…
Q: Josh wants to borrow money for a kitchen renovation. He has saved $2500 already but the cost…
A: Loan refers to an amount that is taken by the borrower from the lender whose repayment is to eb…
Q: Calculate the Following: 2022 Revenue: $600,000 Net units sold in 2022: 3,000 access points 2022…
A: Break even point = It is the level of sales wherein the company have no profit no loss. below…
Q: Your firm has an ROE of 12.1%, a payout ratio of 27%, $594,200 of stockholders' equity, and…
A: First, we can calculate the sustainable growth rate using the given information: Sustainable Growth…
Q: "Company B, is a private company that designs, manufactures and distributes certain consumer…
A: Data given: Earnings=$40 million Av. Price /Earnings Ratio=10 No. of shares to be issued=10 million
Q: Calculate the missing information for the installment loan that is being paid off early. Number of…
A: An installment loan refers to a contract between the lender and the borrower for raising funds in…
Q: Build 3 new and different payment schedules from the uniform series payment of 200 000/ year Find…
A: As per the given information: Uniform series payment = 200 000/yearInterest rate = 8% per year…
Q: Suppose 10-year T-bonds have a yield of 5.30% and 10-year corporate bonds yield 8.50%. Also,…
A: Given: T -bond yield =5.30% Corporate yield =8.50% LP, corporate bond only =0.25% Formula: rCorp…
Step by step
Solved in 2 steps with 2 images
- Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan? A. $94,000 B. $80,000 C. $23,500 D. $14,000Cinemar Productions bought a piece of equipment for $55,898 that will last for 5 years. The equipment will generate net operating cash flows of $14,000 per year and will have no salvage value at the end of its life. What is the internal rate of return?The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
- Taos Productions bought a piece of equipment for $79,860 that will last for 5 years. The equipment will generate net operating cash flows of $20,000 per year and will have no salvage value at the end of its life. What is the internal rate of return?Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and is expected to be driven for ten years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After five years of recording depreciation, Montezuma determines that the delivery truck will be useful for another five years (ten years in total, as originally expected) and that the salvage value will increase to $10,000. Determine the depreciation expense for the final five years of the assets life, and create the journal entry for years 6–10 (the entry will be the same for each of the five years).Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.
- Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.
- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.Kenzie purchased a new 3-D printer for $450,000. Although this printer is expected to last for ten years, Kenzie knows the technology will become old quickly and so she plans to replace this printer in three years. At that point, Kenzie believes she will be able to sell the printer for $30,000. Calculate yearly depreciation using the double-declining-balance method.Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?