Time value Peter just got his driver’s license, and he wants to buy a new sports car for $70,000. He has $3,000 to invest as a lump sum today. Peter is a conservative investor and he only invests in safe products. After approaching different banks, he is offered the following investment opportunities: a. River Bank’s savings account with an interest rate of 10.8% compounded monthly. b. First State Bank’s savings account with an interest rate of 11.5% compounded annually. c. Union Bank’s savings account with an interest rate of 9.3% compounded weekly. How long will it take for Peter to accumulate enough money to buy the car in each of the three cases?

Q: With reference to IAS 16 (Property, Plant and Equipment), discuss the differences between “the cost…

A: Except when another standard requires or enables other accounting treatments, such as assets…

Q: Why are banks currently holding capital well above the minimum regulatory requirement?

A: Capital is the main and important ingredient of banks, without capital , we cannot run a bank,…

Q: Which of these would NOT contribute to a retailer's use of forward buy? O A. Low holding costs O B.…

A: Forward buying - When a buyer negotiates the purchase of a commodity at current price i.e., today's…

Q: Estimates for one of two process upgrades are as follows: First Cost = Php 40,000 Annual Cost = Php…

A: Annual worth is the net revenue from the investment annually. It is calculated using the discounting…

Q: Discuss to what extent deferred tax accounting can be used for income smoothing.

A: Deferred tax is referred as an income taxes for the tax on the losses or profits of the company…

Q: y a dividend each year in the future of 40 and has a current price of 1000. Assuming Shiller’s…

A: The required rate on the stock depends on the dividend paid and corresponding price of stock…

Q: Suppose we want to compute the four-quarter moving average of Company ABC’s sales as of the…

A: In finance we often use the concept of moving averages to predict and forecast sales of future…

Q: Which one of the following statements is correct if the pecking order theory holds? a. Firms with…

A: According to the pecking order theory, managers prefer to fund investment options using the firm's…

Q: Giant Eagle Markets is considering the following two dividend policies for the next five years. Year…

A: Present value of future amount With future value (FV), discount rate (r) and period (n), the present…

Q: The following data are gathered: ·       The real risk-free rate is 1.05% ·       Inflation premium…

A: Risk free rate of the return, which is defined as the theoretical return rate of investment along…

Q: A bond with a price today of $900 is said to: A) Sell at Par, B) Be a zero coupon bond, C) be a…

A: Bond: It is a debt instrument issued to raise debt capital by the company (issuer). The bond…

Q: What is the future value of $20,000 in three years at an annual interest rate of 5%?

A: given pv = 20000 n=3 i=5%

Q: A homeowner just obtained a 30-year (360-month) mortgage for $120,000. The mortgage has a fixed…

A: Loan amount (P) = $120,000 Monthly interest rate (r) = 0.00666666666666667 (i.e. 0.08 / 12) Monthly…

Q: Choose the correct answer. 1. The following are examples of common financial goals and activities,…

A: FIinancial goals means managing one's own money as well as saving and investing. It doesn't include…

Q: True or False. 1. Financial goals can be classified as to timing and purpose. 2. Consumable-product…

A: Financial goals- are the target i.e., saving target, spending target , investment target, etc., set…

Q: ARCABE Enterprises is trying to select the best investment from among four alternatives. Each…

A: Here, Discount Rate = 10% To Find: a) Discounted payback period =? b) Net present value =? c)…

Q: 1) Finance function is limited to supply of funds to the requirements of the organisation. True…

A: Aim of the finance function is a) Raising sufficient funds( Financing Decisions) b) Proper…

Q: Explain how a mortgage company’s degree of exposure to interest rate risk differs from that of other…

A: Commercial banks, investment banks, insurance companies, and brokerage firms are the most frequent…

Q: Kiambu County Government has received equipment worth Kshs.461,520,000 from an American Company…

A: Foreign exchange risk It is the losses  that a international monetary exchange might bring about…

Q: D. Conaider E CRA)= 20%0 E CRe) : 30% a port folio of 2 risk = 10% 8:20% assets A &B where =0:4 A,B…

A: Solution:- Minimum Variance Portfolio is that portfolio in which the weights of securities are such…

Q: When a stock repurchase occurs, which of the following is not correct? a. EPS decreases b. Shares…

A: Solution:- Share repurchase means that the company (ie. the issuer) buybacks the shares from the…

Q: u observe the following information regarding Company ABC and Company XYZ: ·     Company ABC has a…

A: The standard deviation show risk related to the company and beta show the risk related to the…

Q: An analyst is studying the movement of the stock Philippines. His research and came up with a…

A: Total expected return (R) = 0.17   Probability of Strong economy (Ws) = 0.30 Probability of normal…

Q: Consider the following two financial assets: (i) an ordinary share that is expected to pay a…

A: Stock value = Next dividend / (Required rate of return - growth rate)     Bond Current Price  =…

Q: (b) Calculate the effective interest rate paid by Vri.com and Xadine in the following swap. Vri.com:…

A: Interest Swapping- Under this a person who is taking loan at fixed rate wants to changed it into…

Q: Chrustuba Inc. is evaluating a new project with an after-tax cost of s8.0 million at t = 0. There is…

A: Data given: NPV if successful (50% chance) Year Cash Outflow ($) Cash Inflow ($) 0 -8000000…

Q: Vhat is the marketspace?

A: Marketspace is an virtual market that allows third parties to sell their merchandise. Technology…

Q: The asset has FC of 10 000 000 and is expected to last in 10 years with the salvage of 800 000.…

A: Depreciation as per Sum of years Depreciation  First years  = Sum of digits * ( Cost of asset -…

Q: The Nunal Corporation finds that it is necessary to determine its marginal cost of capital.  Nunal’s…

A: The Weighted Average Cost of Capital (WACC) refers to the financial ratio that calculates the…

Q: GsCo.’s stock sells for P35 that recently paid a P5 dividend. The growth rate will remain the same…

A: Expected Return: The expected return is the minimum required rate of return which an investor…

Q: Year 2016 Plant, Property, Equipment (Gross) Accumulated depreciation reported in 2020 Annual…

A: Solution:- Depreciation means the wear and tear cost of an asset. Now, since no such information is…

Q: The Tech company. Inc. is currently making windfall profits from the sales of financial programming…

A: "Hi, Thanks for the Question. Since you asked multiple sub parts question, as per authoring…

Q: GenMath Corporation with a current market value of 40.92 declared a dividend of 6.72 per share for…

A: The dividend is the company's net profit for the period. Dividends are payments made to shareholders…

Q: What trust, privacy and ethical issues do businesses need to be concerned with when trading online?…

A: The main trust, privacy and ethical concerns of business while doing online trading are as follows:…

Q: 1. John approached you with a business proposition to invest in a project. The Annual Cash Flows…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: 1) The financial management decisions can be classified into four basic kinds, Investment Decisions,…

A: Financial decision are divided into 3 main types 1) Investment Decisions 2) Financing Decisions 3)…

Q: Explain liquidity risk and credit risk faced by banks and discuss how banks manage these risks

A: Liquidity risk It is characterized as the risk of bringing about misfortunes coming about because of…

Q: The maintenance on a machine is expected to be ₱8984 for the second year and an additional ₱1,750…

A: Annual cost for 6 years = 1,750 Total Cost for the second year = 10,734 (8,984 + 1,750) Interest…

Q: Refer to the table to answer the following questions: Question Answer What was the closing price for…

A: a. The closing Price for Mckesson on July 7, 2016 is 191.20 b. The high for McKesson per share for…

Q: A waitress's base wage is $11 per hour, plus 10% automatic gratuity for all tables served. If she…

A: Gratuity is a benefit paid by an employer to their employee for services rendered.

Q: Compute the present value of a perpetual investment that would pay P25,000 every year if the…

A: To calculate the present value we will use the present value of perpetuity formula as follows:…

Q: Assume the Black-Scholes framework holds. Consider an option on a stock. You are given the following…

A: Here, Stock Price is 50 Option Price is 3.00 Option Delta is 0.611 Option Gamma is 0.020 Option…

Q: Suppose that a new government is elected and it changes the law applying to firms to: • Allow…

A: The trade-off theory of capital structure proposes that a corporation balances costs and advantages…

Q: A construction management company is examining its cash flow requirements for the next few years.…

A: Future value is referred as the current asset's value at the date of future on the basis of an…

Q: You are preparing to produce some goods for sale You will sell them in one year and you will incur…

A: To calculate the minimum sale price for non negative NPV we will calculate the future value of goods…

Q: Abraham Ace invested 200,000 at 14% interest compound semi-annually, for 8 years. What is the amount…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: The National Company’s bonds have 4 years remaining to maturity.  Interest is paid annually; the…

A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…

Q: The real risk-free rate of interest, r*, is 3%. Inflation is expected to be 4% this year, 5 percent…

A: Bonds: It is an agreement  by a borrower to pay a a money lender their principal and usually…

Q: Corporation Ltd. have 6% coupon bonds traded on the market that have 5 years left to maturity. The…

A: Coupon rate = 0.06 Annual coupon amount (C) = £60 (i.e. £1000 * 0.06) Required return (r) = 0.10…

Q: The future value of $2500 four years from now at 7 percent is

A: Future value for 2500 principal amount plus interest compounded for four years at the interest rate…