QUESTION 3: TIME VALUE OF MONEY You plan to buy a car that has a total cost of RM80,700. You will make a down payment of RM8,070. The remainder of the car’s cost will be financed over a period of 2 years. You will repay the loan by making equal monthly payments. Your quoted annual interest rate is 12% compounded monthly. What will the monthly payment be?

Q: dient series cash flow having ₱3000 on year 3, ₱4000 on year 4, ₱5000 on year 5 and ₱6000 on…

A: Present value is the discounted value of future cashflows.

Q: Mr. Hernandez wants to provide a series of 18 yearly allowance for his 1-year old daughter starting…

A: Present worth will be the difference between total present worth of cash inflows and total present…

Q: A corporation decides to deposit fixed payment per account earning 9% interest per year in order to…

A: Compound interest is the interest that is charged on the principal amount as well as interest…

Q: 2.Find the total number of compounding periods and the interest rate per period for the investment.…

A: Term of investment = 7 years Nominal rate (Annual) = 2.5% Interest is compounded semi annually,…

Q: What is the retum on equity (RoE) If a 3x levered asset returns 10% assuming 7% borrowing cost?…

A: Leverage = 3 Return on assets (ROA) = 10%

Q: Determine the simple payback period of a ₱20,000 with return of 5,000 on year 1; 8,000 on year 2 and…

A: Payback period is the period within which initial investment is recovered.    Payback period Formula…

Q: The readings for module 3 explain that past performance for a company or stock is not a guarantee of…

A: The earnings of a company are most basic measure of a stock's worth. Since you're buying a portion…

Q: (WACC) and leverage

A: Cost of capital refers to the tool which is helpful in analyzing the cost of the capital projects…

Q: John needs to invest to help with his child's college fund. How much would he have to invest to have…

A: Given: Amount = $67,300 Years =13 Interest rate = 2.17%

Q: ABC Corp has an average inventory period (production process time + time before sale) of 36 days.…

A: Short term operating cycle refers to the time required to sell the inventory and realize cash from…

Q: A company is evaluating a new 4-year project. The equipment necessary for the project will cost…

A: Initial cost of the project = $2,900,000 Salvage value = $ 655,000 Dpreciation method = 5-years…

Q: A six year note for 3500 issued on april1, 2015 with interest at 6.9percent compounded semi annually…

A: To calculate the proceeds on January 1, 2017 firstly we should calculate the future value on…

Q: Consider an index fund that contains the following four stocks:   American Campus Communities,…

A: To Find: NAV on 30th march Number of shares of MRK purchased

Q: A stock is expected to pay a $6.00 dividend next year, and the dividend is projected to continue…

A: According to dividend discount modelP0 =D1Ke-gWhere,P0 = current price = To be calculatedD1 =…

Q: What is the net present value of the cost of treatment A. Treatment A costs $1000 now, $1000 after…

A: The discounted value of future cash flows is known as the present value. It can be either be…

Q: An investment costs sh.150,000 and pays sh. 12,000 in perpetuity. If the interest rate is 9 percent,…

A: The payments flow which continues for indefinite period with equal amount and interval is called…

Q: H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed…

A: Initial investment is $2,400,000 Tax rate is 23% Required rate of return  is 10% Estimated annual…

Q: Let r be the expected return of stock i, rRE represent the risk-free rate, b represent the Beta of a…

A: Capital Asset Pricing Model: The CAPM explains the relationship between expected return and…

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

A: Answer 1:- Initial cash flow = Investment in plant and machinery + Net working capital = $80m + $20m…

Q: Energy efficiency of an equipment can be improved by 20% through enhanced maintenance leading to a…

A: Maximum allowable investment is the present value of fuel saving  The maximum allowable investment…

Q: Bianca decides to stop going to the coffee shops in the morning and figures she saves about $30 per…

A: The amount of money after 5 years can be calculated with the help of future value of annuity…

Q: Using the simple interest formula 1 = Pr, determine the deposit that must be made to earn 53123 in…

A: The deposit amount can be calculated with the help of formula

Q: Manly Company issued $400,000 of 9%, 10-year bonds at 102. Interest is paid annually, and the…

A: Bonds are defined as financial instruments used by companies to raise additional funds from the…

Q: If $800 is borrowed and the interest after 6 months is $44, what is the annual interest rate for a…

A: Principal Amount = $800 Time Period = 6 Months Interest = $44

Q: Explain whether the following statement is true: “Duress is an unlawful threat of harm or injury…

A: A void contract is a formal agreement that is voidable from the moment it is signed. Although both…

Q: Q4. A project costing $6,200 initially should produce cash inflows of $2,860 per year at the end of…

A: Given: Year Particulars Amount 0 Initial investment -$6,200 1 Cash inflows $2,860 2 Cash…

Q: Your uncle Harry Potter started allotting ₱60000 at the end of each year for 25 years. One year…

A: Amount deposited every year is P60,000 Time period is 25 years Interest rate is 5% To Find: Amount…

Q: When Reserve Bank actions cause interest rates on newly issued bonds to decrease from 6% to 5%, the…

A: Bonds are corporate debt units that are issued by firms and securitized as tradeable assets. A bond…

Q: calculate the interest, purchase price, and effective interest rate of a $50,000, 2.3%, 26 week…

A: Effective annual rate (EAR) refers to a real interest rate which an investor is expect from his…

Q: A 5-year project will require an investment of $100 million. This comprises plant and machinery…

A: Working Note #1 Calculation of depreciation: Year 1 2 3 4 5 Opening Balance ($) 80000000…

Q: You win a structured settlement in a lawsuit. Assume that the settlement pays $30,000 per year for…

A: Periodic Payment = $30,000 Time Period = 25 Years Discount Rate = 7%

Q: Mr. Jhonny bought a car worth P900,000 last January 1, 2000, and intend to sell it for P300,000…

A: Annuity means a set of finite number of deposits/payments made at equal intervals of time for a…

Q: Find the present value of $1,000 to be received at the end of 4 years at 12% compounded…

A: Formula Present value = FV/(1+i)n Where FV - Future value i.e. $1,000 i - Semi annual interest rate…

Q: (Working with the income​ statement)  If the Marifield Steel Fabrication Company earned $463,000 in…

A: Solution : Earning Per share ( EPS) means that amount which was Calculated as follows. Net Income /…

Q: Commercial Hydronics is considering replacing one of its larger control devices. A new unit sells…

A:

Q: What are the arithmetic and geometric returns for the stock?

A: Geometric return is annualized return found by taking individual return. This return is calculated…

Q: Luther Industries has a dividend yield of 3.6​% and a cost of equity capital of 14​%. Luther​…

A: Cost of Equity = Dividend Yield + Capital gains Yield Capital Gains Yield is equal to the growth…

Q: After learning the course, you divide your portfolio into three equal parts, with one part in…

A: The beta of overall portfolio is calculated as weighted proportion of beta into each respective…

Q: The Wright family wants to save money to travel the world. They purchase an annuity with a yearly…

A: The annuity value at end of 14 years can be calculated as future value of annuity.

Q: What is trade-off credit and collection policies and its compositions?

A: A external financing is an agreement agreement understanding between partners that facilitates the…

Q: A company recently paid a dividend, D0, of $1.25. It expects to have nonconstant growth of 13% for 2…

A: We can use the dividend discount model here to determine the stock's fair value. As per the dividend…

Q: An introduction write up for a risk management.

A: What exactly is risk management?"Risk management" assists an organization in identifying,…

Q: 23. Amanda deposited $5, 600 into a savings account that earns 3.5% interest compounded daily. Find…

A: The future value of the deposit can be calculated with the help of future value function. The…

Q: Mr. Kinders has contributed $116.00 at the end of each month into an RRSP paying 6% per annum…

A: Monthly contribution (P) = $116.00 Interest rate = 6% Monthly interest rate (r) =…

Q: A borrower and lender agree on a negative-amortizing loan in the amount of $300,000 at 4% interest…

A: Future value refers to the value at some future date on the basis of asset or loan amount present…

Q: SHOW SOLUTION 3.The maintenance cost of a new equipment is projected to start at the end of the 2nd…

A: The annual equivalent maintenance cost is the equal amount of cost incurred on equipment during the…

Q: Chauhan Restaurant is considering the purchase of a soufflé maker that costs $10,000. The soufflé…

A: NPV refers to the net present value.  Here we will have to use the provided information and then use…

Q: Assume the following spot rates. Year Spot rate 1 3 2 4.5 3 5.5   Calculate the one-year…

A: The forward rate is the interest rate that the financial transaction gives for a future date. The…

Q: What is the incremental profit? To get a rough project's profitability, what is the project's…

A: Profit represents the economic benefit realized when income from a business activity exceeds the…

Q: C. Paxton Company provided the following income statement for last year: P 87,021,000 (62,138,249) P…

A: Times interest earned ratio shows how many times a company can cover its interest expense with its…

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.