Q: Assume that you start with a balance of $3900 on your credit card.During the first month you charge ...
A: Here, Balance on Credit Card is $3900 APR is 29% Charges for first Month is $400 Charges for Second ...
Q: Improvised explosive devices (IEDs) are responsible for many deaths in times of strife and war. Unma...
A: Equivalent cost refers to the annuity value for the discounted worth of all costs which are associat...
Q: two periods = 0.83; For three periods = 0.75. What is the present value of the serial bonds on Janua...
A: Bond valuation refers to a method which is used to compute the current value or present value (PV) o...
Q: In Future Worth Analysis, the best alternative when there is a fixed amount of capital to invest is ...
A: In future worth analysis, future value of benefits and future value of costs are calculated.
Q: I'm stuck in Question 4
A: Since Question 4 is specifically asked, so the following solution is for Question 4. Solution 4:- Ca...
Q: Complete the tabe: Compounded Month ly Compounded Semi- Annually Com pornded Annually Compounded Qua...
A: Hi, since you have asked a question with multiple sub-parts we will answer only the first three as p...
Q: Determine the weighted average cost of capital for the firm
A: Cost of capital for a source of finance can be defined as the rate of return that a capital provider...
Q: A company has an opportunity to invest money. Two investment alternatives are considered with estima...
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first t...
Q: Task 4. Compute the present value of the following single amount: 1. P250,000 in 8 years compounded ...
A: 1) Future value (F) = P 250000 n = 8 years r = 8%
Q: Big Rock is listed on the local stock exchange and its stock has had mixed performance over the last...
A: Arithmetic mean is the average of all the given set of data and it calculated by dividing the sum ...
Q: The returns on the Bledsoe Small-Cap Fund are the most volatile of all the mutual funds offered in t...
A: Sharp ratio It is a measure of risk adjusted return. In other words, it tells about the excess retur...
Q: Sarafina has bonds in her portfolio. She wants to know about her position in the bond market. Specif...
A: Yield to maturity (YTM) is the total return expected on a bond if it is held until it matures. It is...
Q: If a broker quotes a price of 111.25 for a bond on September 10, what amount will a client pay per $...
A: Quoted price is the price at which the bond is trading or the last price of bond. Quoted price is al...
Q: A bond has a $13,000 face value, a 6-year maturity, and a 3.05% coupon. Find the total of the intere...
A: Face value= $13000 Number of interest payments = 6 Coupon rate = 3.05%
Q: Explain a typical ADI’s sources and uses of funds
A: A commercial bank may be a financial institution that accepts deposits, provides bank account servic...
Q: Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Ye...
A: a) NPV=? When r =8% Year Cashflow ($) PVIF @8% PV= Cashflows*PVIF 0 -37000000 1 -37000000 1 5...
Q: 5 Variable Growth A fast growing firm recently paid a dividend of $0.50 per share. The dividend is e...
A: The value of stock will the present value of all its dividend and the present value of terminal valu...
Q: A pension fund purchased an office block three months ago. A company has agreed to occupy the office...
A: Present value Present value (PV) of a future value (FV) is calculated using periodic interest rate (...
Q: Gyutaro wishes his sister to receive P600,000.00 twelve years from now. What amount should he invest...
A: The present value is calculated by discounting the future values by 1+r factor for the given require...
Q: 6. Given a nominal rate of 15% čómpounde for 12 years in an ordinary annuity. Determine the followin...
A: The factor is calculated using the required rate of return and for the given period. The factor is d...
Q: Big Rock is listed on the local stock exchange and its stock has had mixed performance over the last...
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first t...
Q: a. Calculate the interest component of Payment 13. Interest b. Calculate the principal component of ...
A: Loan amortization refers to a schedule which is prepared to shows the periodic loan payments, amount...
Q: Find the maturity value of a note for 15,000 pesos at 12% ordinary simple interest for 182 days.
A: Ordinary simple interest makes use of 360 days in a year. It does not uses 365 days in a year.
Q: the anhulty of the money which has fUture Wo ed monthly at the rate of 11%?
A: The future value of annuity includes the annuity amount deposited and interest accumulated over the ...
Q: If a broker quotes a price of 111.25 for a bond on September 10, what amount will a client pay per $...
A: Solution : Given, Face value = $1,000 Coupon rate = 7% Accrued interest = Face value * coupon ra...
Q: Coepey OMEGA w tnBod d s The f l magwaking tp ofd d Sts A dyng the makt, e deded bond d os Cve wing ...
A: Bond Number of Bonds Type Coupon rate YTM Maturity Face value A 23 Discount bond 4.40% 8.00% 19 10...
Q: 1. if a small bank lends to a customer who wants a mortgage that is too large for the small bank to ...
A: A loan is a financial transaction in which one or more individuals, organisations, or other entities...
Q: 45. Retirement Savings. A couple thinking about retirement decide to put aside $3 in a savings plan ...
A: Future value is calculated by multiplying the present value with the 1+r factor for the given rate o...
Q: Use to determine the regular payment amount, rounded to the nearest dollar. Consider the following p...
A: Given: Mortgage = $130,000 Periods = 15 Mortgage A: Interest rate =7.25% Closing cost = $1,700 Point...
Q: What amount of money deposited 35 years ago at 8% interest would provide a perpetual payment of $10,...
A: A perpetual payment is one that goes on forever. We will need to compute the present value of the pe...
Q: Calculate the compounded interest after 7 years and 9 months if 500,000 is placed at an annual rate ...
A: a) Amount invested (A) = 500,000 n = 7 years 9 months = 93 months r = 11.28% per annum = 0.94% per m...
Q: the cash flows for this project be?
A: Cash flow shows the amount of cash inflow and outflow from the company. The cash flow statement repr...
Q: You purchase a bond with an invoice price of $1,045. The bond has a coupon rate of 5.66 percent, it ...
A: A bond is an instrument of debt on which coupons are paid by the issuer. Coupons may be paid in peri...
Q: now costs $25.25, and the price has increase exponentially, write an equation that will - Barnaby's ...
A: Future value: Because of the basic principle of the time value of money, one dollar now is worth mo...
Q: You wish to buy a house. The market value of the house is $650,000 and you have saved $120,000 as a ...
A: Interest Rate = 6.5% Time Period = 26 Years Market Value = $650,000 Down Payment = $120,000
Q: their payment every year. Compute the annual payment to settle their debt if the rate of interest is...
A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either r...
Q: Hephzibah Limited is just about to buy a new textile machine for GHS100,000. Although its maximum wo...
A: When the assets are replaced in perpetuity, there will be a best replacement cycle that increases th...
Q: A five year project will require an investment of $100 million. This comprises of plant and machiner...
A: NPV is the difference between present value of cash inflows and initial investment NPV =PV of all ca...
Q: Yield to maturity The bond shown in the following table pays interest annually. (Click on the icon h...
A: Given, the par value is $1000 Coupon rate is 7% Term to maturity is 9 years and market price is $11...
Q: An endowment fund is providing an annual scholarship of P50,000 for the first five years, P60,000 fo...
A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at t...
Q: All else equal, according to the expectations hypothesis, if the slope of the term structure increas...
A: The expectations theory is designed to assist investors in making decisions based on future interest...
Q: Suppose you take out a loan for 180 days in the amount of $11,500 at 14% ordinary interest. After 60...
A: Loan amount (PV) = $11500 Interest rate (r) = 14% Period (n) = 180 days First payment amount (P) = $...
Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,...
A: The stock price which is the maximum price to be paid for share consists of dividends and terminal v...
Q: What is the nominal rate if the effective rate is15.32% compounded semi-annually?
A: Effective annual rate (EAR) refers to a real interest rate which an investor is expect from his inve...
Q: The interest rate for the first five years of a $95,000 mortgage is 7.2% compounded semiannually. Mo...
A: Given, The mortgage is $95000 Rate is 7.2% compounded annually Term is 25 years.
Q: a. Calculate the yield to maturity (YTM) for the bond. b. What relationship exists between the coupo...
A: Yield To Maturity: It refers to the total rate earned by the bondholder for holding the bond till m...
Q: On January 1, 2021, STUDY HARDER Company purchased 9% bonds with face amount of P6,0 The bonds matur...
A: Price of bond is the present value of coupon payment and the present value of the par value of the b...
Q: If money is worth 12% compounded bimonthly, what quarterly savings is required in order to have P320...
A: We need to use future value of annuity formula to calculate quarterly payment PMT =FV*i(1+i)n -1 wh...
Q: Assume that you start with a balance of $3900 on your credit card. During the first month you charge...
A: A credit card is a card that is issued by the bank to the users to enable that holder to pay a provi...
Q: Cash Conversion Cycle. Will each of the following events increase or decrease cash conversion cycles...
A: Cash conversion cycle represent the number of days taken by the company to convert its goods into ca...
4.
Step by step
Solved in 2 steps with 2 images
- New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer’s base price is $1,080,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $605,000. The MACRS rates for the first 3 years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the firm $380,000 per year in before-tax operating costs, mainly labor. Campbell’s marginal tax rate is 35%. What is the Year-0 cash flow? What are the net operating cash flows in Years 1, 2, and 3? What is the additional Year-3 cash flow (i.e., the after-tax salvage and the return of working capital)? If the project’s cost of capital is 12%, should the machine be purchased?The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The companys president must determine whether to make the expansion a medium- or large-scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.50, and 0.30, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firms planners developed the following profit forecasts for the medium-and large-scale expansion projects. a. Compute the expected value for the profit associated with the two expansion alternatives. Which decision is preferred for the objective of maximizing the expected profit? b. Compute the variance for the profit associated with the two expansion alternatives. Which decision is preferred for the objective of minimizing the risk or uncertainty?Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
- Net Present Value, Uncertainty Ondi Airlines is interested in acquiring a new aircraft to service a new route. The route will be from Tulsa to Denver. The aircraft will fly one round-trip daily except for scheduled maintenance days. There are 15 maintenance days scheduled each year. The seating capacity of the aircraft is 150. Flights are expected to be fully booked. The average revenue per passenger per flight (one-way) is 235. Annual operating costs of the aircraft follow: The aircraft will cost 120,000,000 and has an expected life of 20 years. The company requires a 12% return. Assume there are no income taxes. Required: 1. Calculate the NPV for the aircraft. Should the company buy it? 2. In discussing the proposal, the marketing manager for the airline believes that the assumption of 100% booking is unrealistic. He believes that the booking rate will be somewhere between 70 and 90%, with the most likely rate being 80%. Recalculate the NPV by using an 80% seating capacity. Should the aircraft be purchased? 3. Calculate the average seating rate that would be needed so that NPV will equal zero. Round the seating rate to the nearest percent. 4. CONCEPTUAL CONNECTION Suppose that the price per passenger could be increased by 10% without any effect on demand. What is the average seating rate now needed to achieve an NPV equal to zero? What would you now recommend? Round the seating rate to the nearest percent.Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.Den-Tex Company is evaluating a proposal to replace its HID (high intensity discharge) lighting with LED (light emitting diode) lighting throughout its warehouse. LED lighting consumes less power and lasts longer than HID lighting for similar performance. The following information was developed: a. Determine the investment cost for replacing the 700 fixtures. b. Determine the annual utility cost savings from employing the new energy solution. c. Should the proposal be accepted? Evaluate the proposal using net present value, assuming a 15-year life and 8% minimum rate of return. (Present value factors are available in Appendix A.)
- REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings from 24,000 to 46,000 per year. The new machine will cost 80,000, and it will have an estimated life of 8 years and no salvage value. The new riveting machine is eligible for 100% bonus depreciation at the time of purchase. The applicable corporate tax rate is 25%, and the firms WACC is 10%. The old machine has been fully depreciated and has no salvage value. Should the old riveting machine be replaced by the new one? Explain your answer.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?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.