that currently has 100 units of capital, and their desired level a epreciation rate is 10%, how much investment would they need h their desired level of capital in the next?
Q: 8 years ago a company installed a robot that today has a market value of $60,000 and every year it…
A: Given, An information about a company which installed a robot for its operational activities.…
Q: 8) What lump sum should you deposit now at 1.6%, compounded continuously, to attain $750,000? 9) The…
A: Time value of money (TVM) refers to the method used to measure the amount of money at different…
Q: ssume a project has normal cash flows. All else equal, whic llowing statements is correct? A…
A: The pay back period is the amount of time required to recover the initial amount of investment and…
Q: Calculate the present value of an annuity
A: Present Value of Annuity: It refers to the present worth of the future annuity cash flow stream and…
Q: Mariano deposited P5,000 today in an account that pays 8% compounded semi-annually. Two years…
A: Amount at the end of n periods at i% rate of interest can be calculated as: = Principal * (1+i)^n
Q: If money is worth 12% compounded quarterly, find the present value of 28 quarterly payment of PHP…
A: Interest rate = 12% Quarterly interest rate (r) = 12%/4 = 3% Number of quarterly payments (n) = 28…
Q: What will the new earnings per share be if the firm uses its excess cash to complete a stock…
A: Stock Repurchase: Also known as buyback, it is a decision made by the firm to repurchase its shares…
Q: 2. You are considering putting solar panels on the roof of your house. The installer is offering you…
A: Solution:- Simple Payback Period Is the period is the time period at which the benefits derived gets…
Q: the most recent tax year materially participated in certain real estate activities. Under the…
A: Given activity is tax payer involved directly in material these are treated as non passive…
Q: You are given the following information on two traded bonds making semi-annual coupon payments.…
A: YTM or Yield to maturity is the rate of return expected on a debt instrument considering the fact it…
Q: What are the strengths and weaknesses for establishing base pay in international contexts for home…
A: In the home country based approach the pay compensation is based on the payment levels of the home…
Q: Compute the nominal annual rate of interest compounded quarterly at which $300.00 paid at the end of…
A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…
Q: A company has a choice of two alternatives to improve their production process. Each alternative…
A: Explanation : When the two Alternative was given & we can select only one of the alternative…
Q: It costs P500,000 at the end of each year to maintain a section of Kennon Road in Baguio City. If…
A: The question is based on the concept of the present value of money. The present value is calculated…
Q: OPEC is a(n) cartel that includes. Olegal; 17 O legal; 8 illegal; 17 O illegal; 11 national…
A: OPEC short for Organization of the Petroleum Exporting Countries was established in Baghdad, Iraq in…
Q: What is the inventory turnover if an annual credit sales value of 365 million; accounts receivable…
A: Solution:- We know, Inventory Turnover Ratio means the ratio of cost of goods sold to the average…
Q: You are considering making a movie. The movie is expected to cost $10.0 million up front and take a…
A: Net present value is the difference between the present value of cash inflows and present value of…
Q: how a firm might use a commodity derivative to reduce risk in its business? please include a…
A: In the world of derivatives, options etc. commodity derivatives are an important concept.…
Q: 2. At the end of each year, an investor deposits some money into a fund earning 7% interest. The…
A: When the certain amount of money is deposited at the regular interval over a period of time at a…
Q: The yield to maturity on 1-year zero-coupon bonds is currently 5.5%; the YTM on 2-year zeros The…
A: Bonds are referred to as debt instruments that are issued by the government or corporates to raise…
Q: Gordon Rosel went to his bank to find out how long it will take for $1,300 to amount to $1,720 at…
A: Present value = $1,300 Future value = $1,720 Interest rate = 0.12
Q: A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells…
A: Strike price When a derivative contract is exercised, the strike price is the price at which it can…
Q: What is credit history? A record of a person's borrowing and repayment activity used to calculate…
A: Credit history checks if the borrower has been responsible with the debt payments or not. It checks…
Q: risk management ideas, common reaction strategies, and IT system recovery issues
A: Some of the important risk management ideas are listed below: Keep an eye on changes in your…
Q: Which of the following is a financial synergy?
A: Due to synergies from mergers and acquisitions improve their debt capacities. Low cost of capital.
Q: A project requires an initial outlay at t = 0 of $25,000, its expected cash inflows are $5,000 per…
A: Discounted payback period is the period required to collect any project's initial outlay after…
Q: A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells…
A: Data given: Current market price of gold per ounce = $2100 Upper Price of gold per ounce = $2200…
Q: Suppose you plan on spending $100/ac on restoring a forest on bare land you plan to buy. The project…
A: Return means earning something over the invested amount. Investment is done to get some return from…
Q: Please describe the Compound Option, the advantages and disadvantages of investing in this option…
A: Options are referred as the financial derivatives, which provides the right to the purchaser, but…
Q: binomial model account of volatility
A: Volatility is simply referred to as the uncertainty or risk in the change in the value of a…
Q: i. Advise the company on the best investment option for the maturing funds. ii. Based on your choice…
A: Future Value: It represents the future worth of the present amount of investment and is estimated…
Q: Exclusions from gross income, except: O Interest on the price of land covered by the Presidential…
A: As per Bureau of Internal Revenue(BIR) of republic of Philippines, certain items have been specified…
Q: The following bond list is from the business section of a financial newspaper on January 1, 2016.…
A: Given, The Coupon rate of bond 4.13% Term is 5 years The bond pays semi annual coupons
Q: My question is for a synthetic call option why do we need to borrow the present value of the strike…
A: Synthetic calls and synthetic puts are the two types of synthetic options available. Both forms of…
Q: 8 years ago a company installed a robot that today has a market value of $60,000 and every year it…
A: Given, Value in market of the robot=$60,000 Decline in the value each year= $2,000. Value of MARR…
Q: On January 1, 2019, Gurl Company purchased as a long term investment P5,000,000 face amount of Lulu…
A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…
Q: 12. A company has agreed to pay $4.2 million in 6 years to settle a lawsuit. How much must it invest…
A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount invested is…
Q: 1. An investor purchased a newly issued bond with a maturity of 10 years 150 days ago. The bond…
A: Given, Time of bonds maturity =10 yr150days. Coupon rate of bond= 5%(semi-annually) Face value of…
Q: Use the double-declining-balance method to make a depreciation schedule for a piece of equipment…
A: The double declining balance method of depreciation is an accelerated method of depreciation in…
Q: Why might the portfolio effect of a merger provide a higher valuation for the participating firms?
A: Portfolio is defined as the collection of the financial investment such as - commodities, stock,…
Q: ABC Broadcasting Inc. acquires GO Telecommunications Inc. ABC runs TV channels while GO sells TV and…
A: When one company combines with another company in order to expand the business by either merging or…
Q: MV Corporation has debt with market value of $100 million, common equity with a book value of $97…
A: To Find: Weight of debt Weight of equity Weight of preferred stocks
Q: Put–Call Parity - A put and a call have the same maturity and strike price. If they have the same…
A: Explanation : When share Put and Call having the same maturity & also Strike price is same then…
Q: how a firm might use a hedging to reduce risk in its business? please include examples
A: Hedging is an important tool in finance. A firm or a company often makes use of hedging to reduce…
Q: Suppose a firm uses the WACC as the single hurdle rate in determining the value of capital budgeting…
A: The overall cost of capital, also known as the Weighted average cost of capital (WACC), is the…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net Present Value(NPV) is one of the modern techniques of capital budgeting which considers the time…
Q: Morty is looking into buying an apartment. He checked out a few places recently, and it looks like…
A: The answer is Yes. Morty is ready to buy that apartment.
Q: The sum of P4200 will be withdrawn from a fund at 3-month intervals, the first withdrawal to be made…
A: Solved using Financial Calculator PV = -48,000 FV = 6000 PMT = 4200 I/Y = 7 CPT N = 22.2304…
Q: vails the loan offered by his company with a minimal interest of 1.5% every 6 months. He borrows…
A: Loan is an agreement between two people where one lends a sum of money and the other borrows. The…
Q: You have decided to retire and want to sell your shares in a closely held, all equity firm. The…
A: Share repurchase is referred to as a transaction where a company buys back its own shares from the…
Step by step
Solved in 2 steps
- Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Suppose a firm estimates its overall cost of capital for the coming year to be 10%. What might be reasonable costs of capital for average-risk, high-risk, and low-risk projects?Your division is considering two investment projects, each of which requires an up-front expenditure of 25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars): a. What is the regular payback period for each of the projects? b. What is the discounted payback period for each of the projects? c. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? d. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? e. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? f. What is the crossover rate? g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?
- 6. A company will invest $37,072 on a capital expenditure (an asset with multi-year use). They estimate it will save $25,166 per year for the next 2 years. If their TVOM is 5.89%, what is the worth of the investment per year? (be sure to include the sign)4. A project capitalized for ₱150,000 invested in depreciable assets will earn a uniform, annual income of ₱59, 547 in 10 years. The costs for operation and maintenance total ₱27,000a year, and taxes and insurance will cost 4% of the first cost each year. If the company expects its capital to earn12% before income taxes, is the investment worthwhile? Show by: Rate of return Solve and show the solution.How does the net working capital affect the NPV of a 5-year project if working capital is expected to increase by $25,000 in to (and decrease in t5 again by the same amount) and the firm has a 15% cost of capital?
- 4. A project capitalized for ₱150,000 invested in depreciable assets will earn a uniform, annual income of ₱59, 547 in 10 years. The costs for operation and maintenance total ₱27,000a year, and taxes and insurance will cost 4% of the first cost each year. If the company expects its capital to earn12% before income taxes, is the investment worthwhile? Show by: Annual cost method Solve and show the solution.You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5.8 million and cost of goods sold of $3.48 million. You will be depreciating a $2 million machine for 5 years using straight-line depreciation. Your tax rate is 33%. Finally, you expect working capital to increase from $190,000 in year 2 to $305,000 in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3? Complete the following pro forma statement. (Round to the nearest dollar.) Pro Forma Year 3 Sales $ COGS Depreciation EBIT Tax Earnings Depreciation Net working capital Free cash flows15. You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5.4 million and cost of goods sold of $3.24 million. You will be depreciating a $1 million machine for 5 years using straight-line depreciation. Your tax rate is 38%. Finally, you expect working capital to increase from $200,000 in year 2 to $305,000 in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3? **round to the nearest dollar**
- You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5.9 million and cost of goods sold of $3.54 million. You will be depreciating a $2 million machine for 5 years using straight-line depreciation. Your tax rate is 33%. Finally, you expect working capital to increase from $210,000 in year 2 to $ 295,000 in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3?3- The company will invest for a 2-year project. The first year, return of the investment is 240.000 USD and the second year, return is 432.000 USD. If the annual interest rate is 20%, how much money should be invested at present value for this investment to be profitable?You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $11.8 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,834,300, $1,887,600, $1,856,000, and $1,309,500 over these four years, respectively, what is the project’s average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
