This question is based on the following in formation: An investment is Machinery costing P 250,000 with a 4-year life and no salvage value is expected to produce the following net income after taxes of 30%: End of year 1 P 17,000 2 22,000 3 25,000 4 26,000 How much is the annual tax shield? How much is the annual tax shield? A. P 17,580 B. P 17,850 C. P 18,570 D. P 18,750 What is the ROI (using the cash income)? A. 6.3% B. 9% C. 31.3% D. 34%

Q: Perkins, Inc., is considering an investment of $383,000 in an asset with an economic life of 5…

A: Cash Flows: Cash flows eliminate the impact of non-cash charges and give the true picture of the…

Q: A Province of Manitoba $250,000 face value bond carrying a 2% coupon was issued on December 1, 2006,…

A: Here, Face value = $250,000 Coupon rate = 2% Time to maturity = 30 years Market yield (YTM) = 4.19%…

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A: Weighted average cost of capital (WACC) refers to the combined cost of company's capital from all…

Q: Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. The…

A: Solution : Money Market Hedge is that technique which provide the protection against loss which…

Q: One of the best examples of a zero-coupon bond is?

A: In finance zero coupon bonds are an important debt instrument used by companies as well as by…

Q: When considering the investor's desired outcome, if you have generated very large returns in the…

A: Re balancing strategy- In portfolio management, the importance of re-balancing strategy is…

Q: Q5. At 5% annual interest, what is the difference in the present and future value of P100 paid at…

A: When the periodic payment at regular interval is made at end of the period, it is known as ordinary…

Q: net investment

A: Cash flow represents the inflow and outflow of cash in a particular period of time for the company.

Q: A car loan of $46,700 is amortized over 8 years by equal end-of-month payments at 2.9% compounded…

A: Ans = 36019.15     =PMT((2.9%/12),8*12,-46700,0) = $ 545.65

Q: 2. By the conditions of a will, the sum of P25000 is left to a girl to be held in trust by her…

A: A cash flow statement is a financial statement that summarize all cash inflows a company receives…

Q: Financial analysts forecast GDY Inc.’s growth for the future to be 5%. GDY's recent annual dividend…

A: The stock value can be calculated with the help of dividend growth model

Q: An industrial plant bought a generator set for P120, 000. Other expenses including installation…

A: Here the amount to be depreciated will include the installation cost. This is because without the…

Q: A. What is the future value of each of these options at age 65, and under which scenario would he…

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

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A: International business refers to any cross-border exchanges of products, services, or resources…

Q: What is the yield to maturity of a eight​-year, $10,000 bond with a 5​% coupon rate and semiannual…

A: The yield to maturity of the bond can be calculated with the help of RATE function of Excel

Q: ou iust invested 549.000 that you received as an insurance settlement. How much more will this…

A: Money that is invested today earns interest. This makes the future value of money more than present…

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

A: NPV is the difference between present value of cash inflows and initial investment. NPV =PV of all…

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: Rey borrowed F 40,000 at 12 % compounded semiannually. He agreed to pay the der semiannually a sum…

A: The loans are paid by the periodic payments that carry the payment for the principal amount and…

Q: Question 20 An analyst estimates that project C's expected rate of returm is 10%, your required rate…

A: To analyse a project, the expected rate of return and required rate of return are compared. if the…

Q: 16. Use Table 11-2 to solve the problem. How much (in $) must be invested today at 6% compounded…

A: Future value (FV) = $7000 Interest rate = 6% Quarterly interest rate (r) = 6%/4 = 1.50% Period = 3…

Q: What is the price of a Treasury STRIPS with a face value of $100 that matures in 15 years and has a…

A: Formula Price = FV/(1+R)N Where FV - Face value i.e. $100 R - Yield rate i.e. 7.0% N - Period i.e.…

Q: A lease valued at $18,000 requires payments of $1,813 at the beginning of every month. If money is…

A:

Q: 2. Why is it important to understand the basics of financial planning?

A: Finance is defined as the wide term for the creation, management, and also study of funds as well as…

Q: Instruction: Show complete solution including the cash flow diagram if not given, Formula function,…

A: Given, Units = 125000 Sunk cost for Design A = $5000 Sunk cost for Design B = $9000

Q: Mr. Cruz deposited P150, 000.00 now, so that his 2 years old daughter will receive 5 equal amounts…

A: First payment period (t) = 15 Years Interest rate (r) = 12% Number of payments (n) = 5 Deposit…

Q: cashflow diagram.

A: The cash flow statement represents the inflow and outflow of cash from the company in a particular…

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

A: Horizon value or continuing value is the present value of all cash flows beyond the explicit…

Q: 3. Why is the initial value of a futures contract zero? a. impossible to tell b. the futures…

A: Answer:- c. You do not pay anything for it. EXPLANATION:- A futures contract is an agreement between…

Q: rmine the present value equivalent of a geometric sequence of annual cash flows starting at P 1,254…

A: Geometric sequence is that sequence in which the money grow each year by some fixed percentage of…

Q: 1. A share of stock of company is now selling for 23.5 lei. A financial analyst summarizes the…

A: Working Note #1 Computation of Annual Return Scenario Beginning Price (Lei) End of year Price…

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A: Stock price is defined as the maximum price that an investor is ready to pay for a stock. It is…

Q: an investment project provides cash inflows of $850 per year for 5 years. What is the project…

A: Initial cost = $5600 Annual cash inflow = $850 Period = 5 Years

Q: Consider a project with free cash flows in one year of $148,100 or $180,200, with each outcome being…

A: Given, cashflows at weak economy is $148,100 Cash flow at strong economy is  $180,200 Cost of…

Q: A stock does not currently pay a dividend, but you expect to sell the stock for $73 in 4 years. The…

A: Stock price in 4 years (P4) = $73 Period (n) = 4 Years Required return (r) = 7%

Q: A parcel of land can be leased for a period of 10 years. Initial development costs for clearing,…

A: Initial cost (C) = P 250000 First year revenue (R) = P 22000 Growth rate (g) = 5% n = 10 years r =…

Q: Apply incremental B/C analysis at an interest rate of 8% per year to determine which alternative…

A: The relation between the cost of the project and the benefits from the project is known as…

Q: D9 A stock has an initial value of $7, and can go up by 1.2 or down by 0.7, the risk free rate is…

A: Spot price (SP) =$7 Exercise price (EP) = $6 Expected future spot price (lower limit)on expiry date…

Q: A debt of $1881 with interest at 9.34% compounded monthly is to be repaid by equal payments at the…

A: Given: Debt 1881 Interest rate 9.34% Years 5

Q: You already have $54,700 in your savings account that earns 3.50% compounded annually. You will…

A: Current amount (PV) = $54700 Quarterly deposit (P) = $2,820 Interest rate = 3.50% Quarterly interest…

Q: QUESTION 3: TIME VALUE OF MONEY You plan to buy a car that has a total cost of RM80,700. You will…

A: Present Value of Ordinary Annuity refers to a concept that determines the value of cash flows at…

Q: hich project should the company pursue? Why?

A: NPV = Present value of cashinflows - Present value of cash outlay.

Q: Maintenance cost of a machine is S 100 during the second year and to increase by $ 100 every year…

A: Here we will use the present equivalent conversion factor.  The maintenance cost of a machine here…

Q: Ana Chavarria, front office manager of The Times Hotel, has been meeting with the owner  and general…

A: A user registration system often requires the creation of a username and password, as well as the…

Q: 4. An investor has a budget of 100000 lei and intends to place it in Treasury bills and two stocks A…

A: The return that shows the expectation of profit of an investor from his portfolio is called expected…

Q: Illu.1: NIT Ltd. declared dividend at 25% on its re are quoted in the market at Rs.10. You are requi…

A: Dividend is defined as the return that a shareholder gets from the company for the money invested by…

Q: You have two options to invest $1000 in: i) A $1050 face value bond with coupon rate c = 6%. ii) A…

A: Bond is the debt security that investors uses to reduce the risk and increase stable return from…

Q: St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage…

A:

Q: Bond Prices and Interest Rate Changes A 7 percent coupon bond with 8 years left to maturity is…

A: The current price of the bond is equal to the present value of all its future payments discounted at…

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

A: NPV is the difference between the present value of cash inflows and initial investment NPV =PV of…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.