Q: What should be their current stock price?
A: Stock Price: The stock price is the present market value to sellers and buyers. The stock price can...
Q: What lump sum of money must be deposited in a bank account at present time so that Php 500 per month...
A: Monthly withdrawal (M) = Php 500 Number of withdrawals (n) = 5 years = 60 months Interest rate (i) =...
Q: Suppose a company's equity is currently selling for $55 per share, with 4 million shares outstanding...
A: Market value of Equity (E) = no. of equity shares x market price per share = 4 million * $55 = $220 ...
Q: Thomas is planning to withdraw $6000 from a savings account at the end of each quarter for five year...
A: The present value of future amount of annuities to be withdrawn will give the amount that must be in...
Q: The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the m...
A: The call option give opportunity to buy the currency at the specified price and at specific date but...
Q: XYZ Inc. had the following figures in its Income Statement: (please show solution) Sales Php 920...
A: Cash inflow consists of sales and other income, whereas cash outflow consists of COGS, salaries, adv...
Q: 2-year zero coupon bond has a face value of £100 and a price of £92. A three year zero coupon bond h...
A: Zero coupon bond do not have any coupon and they are traded at discount and cash out on face value o...
Q: True or False. 1. Business is purely profit-oriented. 2. Finance is the function in business whic...
A: Business means an organization engaged in commercial activities and providing employment. It may be ...
Q: A fund manager is considering three mutual funds. The first is a stock fund, the second is a long-te...
A: Given: Risk free rate 8% Particulars Return Standard deviation Stock fund 20.00% 30.00% B...
Q: Estimate the capital required under Basel I for a bank [assume it is an OECD þank ] that has the fol...
A: As per the Information given in the following question we find a) Time period= 2 years forward contr...
Q: Bulldogs Inc., a corporation with a 40% tax rate, plans to issue P500,000 of 5% preferred share in e...
A: Weighted average cost of capital = cost of debt * (1-tax rate) * weight of debt in capital + cost of...
Q: You are in a managerial position with $50,000 available cash. You have the option of investing the m...
A: Future value of money includes the interest accumulated over the period and deposit made. More is co...
Q: 18. Questions 18 and 19 are based on the following information: Regine Company manufactures plugs us...
A: In its most basic form, total cost (TC) refers to all of the costs associated with producing somethi...
Q: Suppose that P 4500 is deposited each year into a bank account that pays 8% interest compounded quar...
A: When an amount is deposited in any account, it pays interest. A series of equal annual payments is c...
Q: . A one-month European put option on a non-dividend stock is currently selling for 2.50$. The stock ...
A: An European put option can only be exercised on its maturity. It is a kind of derivative option that...
Q: Robert owns of RPM which involve in manufacturing business The cash flow profile of RPM Enterprise i...
A: Depreciation can be defined as the process of allocation of the cost of the asset to its given usefu...
Q: Dick Eckel recently set up a TDA to save for his retirement. He arranged to have $135 taken out of e...
A: Future value is compounding all intermediate cashflows to future point of time. It helps to ascertai...
Q: Describe payday loans, tax-refund advances and structured-settlement advances—the differences betwe...
A: Payday loans are also sometimes known as cash advances. These are unsecured loans with maturity peri...
Q: Why dividen yield ratio increase while dividend payout ratio decrease? please explain in terms of in...
A: Dividend Yield ratio: It is the ratio will be used to calculate the ratio of dividen...
Q: A civil engineer plans to own a 300 m² lot after 5 years for an estimated cost of 570,000. To accumu...
A: Compounding is a process of reinvestment. In this process the investments and the gains that are ear...
Q: AAA Inc. is a U.S. Firm that has substantial international business in Japan and has cash inflows in...
A:
Q: National Inc. has 100 bonds outstanding with maturity value each of P1,000. The nominal required rat...
A: Par value of bond (FV) = P1000 Coupon rate = C Semi annual coupon amount (P) = 1000*C/2 = 500C Years...
Q: nnual deposits of $3200 at the beginning of every six- month period into a fund earning 4.2% compoun...
A: Future value includes the deposits made and the interest accumulated over the period of time. That g...
Q: DGG Inc. has sold 2,000 shares of P200 par, 4% preferred stock at an issue price of P184 per share. ...
A: Share price: Share price is the current market price of the share. It is the price of the share at w...
Q: The Black-Scholes model is used by Bulldogs Inc. to value call options on the stock of National Inc....
A: There is one popular mathematical model, which is used for calculation of value of call or put optio...
Q: The current zero-coupon yield curve for risk-free bonds is as follows: What is the risk-free interes...
A: Yield to maturity is the rate of return for a bond with an assumption that bond is held till maturit...
Q: A financial asset delivers a dividend of £2 per share in the first four years, and £2.5 each year af...
A: Present Value: It represents the present worth of the future expected cash flows. It is computed by...
Q: Given six years of percentage return of Stock A and Stock B, identify the expected return, and risk ...
A: Let R1 to R6 be the returns from 20X1 to 20X6 Ra = Expected return of A Rb = Expected return of B
Q: o. is considering a 5-year, P6,000,000 bank loan to finance service equipment. The loan has an inte...
A: Loans are paid by equal annual payments that carry the interest and payment for the principal amount...
Q: A five year P1,000 par value bond pays a 5% annual coupon. Given a YTM of 7%, what is the price of t...
A: The price of bond will be the present value of all coupon payment and present value of face value. B...
Q: Which project(s) should a firm choose when the projects are independent? When they are mutually excl...
A: Time period is 3 years Initial Investment for both projects is $2550 Discount rate is 10% To Find: ...
Q: Just in preparation for his retirement, a man intended to invest today into a bank with an interest ...
A: Nominal interest rate is interest without considering the impact of the compounding and is less annu...
Q: Franco wants to accumulate P150,000 in order to make the down payment for a new car. He plans to inv...
A: Annual investment (P) = P25,000 Future value required (FV) = P150,000 Interest rate (r) = 8% Period ...
Q: An annuity with a cash value of $14,000 earns 7% compounded semi-annually. End-of-period semi-annual...
A: An annuity is defined as the fixed payment made at the beginning or the end of the period for a part...
Q: For questions 8-10 assume that Rosa has a 10% chance of getting sick in the next year. If she gets s...
A: Risk premium is the premium that an individual gets due to taking risks. So, whatever a person saves...
Q: A company has a P1,200 face value bond with 8 years until maturity. The bond possesses a characteris...
A: Approximate Yield to maturity is the rate of return of a bond with an assumption that the bond will ...
Q: 8. A store manager obtained a loan of $45,000, at 6 3 8% interest, for 14 months to purchase supp...
A: The simple interest is simply calculated as product of principal rate and time
Q: Ms. Alina made a deposit of ₱400,000. The amount was left to accumulate at 10% compounded quarterly ...
A: A depositor is paid an amount of fee on the deposit made, which is called interest. Interest is paid...
Q: Violet Inc. bonds currently sell for P1,500 and the same bond was originally sold at P1,500. This in...
A: Current price = P1500 Original price = P1500 Annual coupon payment = P37.50 Period = 5 Years
Q: National Co. follows a strict residual dividend policy. The company is forecasting that its net inc...
A: Residual dividend are leftover dividend after the net income is used towards capital expansion as pe...
Q: On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at...
A: Notes receivables are the promissory notes which works as a legal document for repaying the money bo...
Q: What factors to determine in choosing either Bonds / Preference Shares or Ordinary Shares as the f...
A: Capital Structure is the structure of the firm capital which consists the mix of debt , equity and p...
Q: Alexa Co. is the value of its equity given the following information: Government risk-free rates tod...
A: Here, Government risk-free rate = 4.5% Dividends of next year = Php10.00 Growth rate = 20% per year ...
Q: Assume that ASX 300 Index represents the risky portfolio. Calculate the annual return for the period...
A: Annual return is a return percentage of profit or loss occurring in one year of holding period to th...
Q: 11. What is the maturity date of a loan taken out on May 7, for 74 days? May 31 June 19 July 17...
A: The maturity date of the loan can be calculated as current date plus the loan tenure. After May 7, ...
Q: Red Company is coming up with an investment that pays 8% interest compounded semiannually. What is t...
A: Effective Annual rate refers to the rate earned on savings account where compounding is done over a ...
Q: Which of these is not typically a responsibility of a property manager? Maintenance programs O Marke...
A: Property manager is the person who sees the day to day working of the real estate.The responsibility...
Q: Franco is considering investing P18,500 in an investment that will have a maturity value of P32,500 ...
A: Investment amount (P) = P18,500 Maturity value (F) = P32,500 Period = 8 Years Monthly period (n) = 8...
Q: Providing a 21% rate of return, what is the NPV?
A: Net present value (NPV) of an alternative refers to the variance between the initial investment or p...
Q: ny has a financial break-even point at P163,500. How much is the total preferred dividends to be dis...
A: Financial break even point is a point where earning per share of the entity is equal to zero.
Based on the cash flows given below, calculate the PI of a project that has a required
| Year 0: | -$94,000 | ||
| Year 1: | $19,000 | ||
| Year 2: | $36,000 | ||
| Year 3: | -$16,000 | ||
| Year 4: | $103,000 |
| PI | Type your answer here | ||
| Accept project | Choose your answer here |
Step by step
Solved in 2 steps with 3 images
- Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Use the information from the previous exercise to calculate the internal rate of return on both projects and make a recommendation on which one to accept. For further instructions on internal rate of return in Excel, see Appendix C.Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
- The Ulmer Uranium Company is deciding whether or not to open a strip mine whose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2. Plot the project’s NPV profile. Should the project be accepted if r = 8%? If r = 14%? Explain your reasoning. Can you think of some other capital budgeting situations in which negative cash flows during or at the end of the project’s life might lead to multiple IRRs? What is the project’s MIRR at r = 8%? At r = 14%? Does the MIRR method lead to the same accept-reject decision as the NPV method?There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
- Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: If the discount rate is 12%, compute the NPV of each project.
- Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
