Q: Find the present value of an annuity due that pays $3000 at the beginning of each quarter for the…
A: Quarterly payment (P) = $3000 Period = 7 Years Quarterly period (n) = 7*4 = 28 Interest rate = 5.4%…
Q: A. Using the information above, Draw the shape of the German spot yield curve (does not need to be…
A: Data given: Maturity(T) Spot rate (%) r(1) -0.47 r(2) -0.56 r(3) -0.54 r(4) -0.48 r(5)…
Q: Classify the financial problem. Assume a 9% interest rate compounded annually. Deposit $200 at the…
A: Solution:- When an equal amount is deposited each year, it is called annuity. The accumulated value…
Q: A lottery offers you a choice of $1,000,000 per year for 30 years or a lump-sum payment. What…
A: Solution: - When an equal amount is paid each period, it is called as annuity.
Q: Public Islamic Bank Bhd has excess fund and decided to invest in Malaysia Government Investment sue…
A: Face Value MYR 20,00,000.00 Issuance Date 07-04-2019 Maturity Date 07-04-2023 Coupon Rate…
Q: Given the data in the table and the information below, please answer the following parts. Show all…
A: Here, Forward Rate of 3 year loan starting in 2 year (f2,3) is 0.08% Forward Rate of 2 year loan…
Q: Brans Co. is considering a $270,000 investment, which will provide net returns of $110,000,…
A: Year Cashflow Cumulative 1 -270000 -270000 2 110000 -160000 3 140000 -20000 4 220000 200000…
Q: Question 9 Dividends on CCN corporation are expected to grow at a 9% per year. Assume that the…
A: Fundamental price of the share is calculated using Gordon Growth formula. It determines whether the…
Q: Suppose a bond’s price is expected to decrease by 3% if its market discount rate increases by 50…
A: The price of the bond and market interest rate have inverse relationship. if the price of the bond…
Q: Consider a 30-year fixed-rate home loan of $565,500 with an interest rate of 4.25%. What is the…
A: Loan amount (P) = $565,500 Interest rate (r) = 4.25% Period (t) = 30 years
Q: c. CIMB Islamic Bank Bhd had purchased Negotiable Islamic Debt Certificate (NIDC) with a nominal…
A: Note: This post has two distinct questions. The first has been answered below
Q: The owner of a bicycle repair shop forecasts revenues of $168,000 a year. Variable costs will be…
A:
Q: 2. Alice wants to have $90,000 ten years from now. If her bank is paying 4.12% and compounds weekly,…
A: PV = FV / (1 + r / m)m*n FV = Future value = $90,000 PV = present value r = rate of interest =…
Q: teady Company's stock has a beta of 0.21. If the risk-free rate is 5.9% and the market risk…
A: Cost of equity = Risk-free rate + Beta(Market risk premium) where, Risk-free rate = 5.9% Beta = 0.21…
Q: Mrs. Carter deposits P 100 in the bank at the end of each month. If the bank pays 6 % per year…
A: Monthly deposit (P) = P100 Interest rate = 6% e = 2.7182818284590452353602874713527 Monthly interest…
Q: All else equal, an increase in the information asymmetry between informed traders and liquidity…
A: Asymmetric information causes illiquidity, which is then exacerbated by liquidity providers'…
Q: Next year’s expected firm earnings are $8,000, shares outstanding 2000, ROE=16% required rate of…
A: Share price: Share price is the current market price of the share. It is the price of the share at…
Q: minimum yield that
A: Bond of yield refers to the amount of return that an investor receives from the invested coupon’s…
Q: 1. RAJAH COMPANY IS GOING TO INTRODUCE ONE OF THE THREE NEW PRODUCTS. A,B AND C OR DO NOTHING AS THE…
A:
Q: You decide to provide yourself with a retirement account by depositing X into an account at the…
A: An immediate annuity is an ordinary annuity where the payments start immediately after being…
Q: he annual interest rate on the loan is
A: Interest Rate: It is the rate used to compute the finance charge paid by the borrower for taking a…
Q: Find the monthly payment for the loan. (Round your answer to the nearest cent.) New-car financing…
A: The monthly payment on the car loan can be calculated with the help of present value of annuity…
Q: As a bondholder, what risks would you face, and how are these risk factors lower for bonds than they…
A: Bond: A bonds area unit is typically thought to be a secure investment. Bonds are unit monetary…
Q: How much money must be deposited at the end of each year in a savings account that pays 9% per year,…
A: Future value (FV) = P10,000 Interest rate = 9% e = 2.7182818284590452353602874713527 Effective…
Q: An investor is considering making an investment and is deciding between two possible alternatives: •…
A: An effective rate of interest is the actual rate of interest that an investment holds. In this…
Q: If you are the manager, you should understand which of the operations do not create benefit from…
A: Depreciation of currency is termed as the reduction of value of currency in terms of other currency.
Q: Falk Enterprises borrowed $8,500 at 6.25% compounded semiannually to purchase a new forklift. The…
A: The question is asking about computation of amortization schedule. Amortization schedule is…
Q: If a company has an invoice that is pending collection, and in order to advance its payment, it…
A: Trade credit is a term which is used to purchase the goods on credit. To ensure the timely payment…
Q: Gas was 3.04 a gallon on Monday. On Wednesday, gas prices increased 6.5%. On Friday, prices…
A: The price of gas on Friday would be calculated as net change in gas price plus the original price
Q: Suppose that we can describe the world using two states and that two assets are available, asset K…
A: Given, Current price of asset K =$50 Current price of asset L = $50.
Q: A concrete hollow blocks (CHB) plant has an overhead cost of P150,000 per month. The material cost…
A: Break-even Point: The break-even point is that level of sales at which the operating income (EBIT)…
Q: For questions (1-6) bold the correct answer or complete with your result if none is correct. (1-2)…
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: A. 20Y5 Annual net cash flow is incorrect. B. Present value of annual net cash flow Less…
A:
Q: A stock has a volatility of 35%. A call option with an exercise price of $50 has an expiration of 6…
A: Given: Particulars Amount Current stock price 5 Standard deviation 35% Risk free rate 5%…
Q: A pair of earrings is priced at P30,000. A client made a down payment of P5,000 and promised to pay…
A: Price = P30,000 Down payment = P5000 Loan amount (PV) = 30000-5000 = P25,000 Interest rate = 3%…
Q: Using the data in the following table, calculate the volatility (standard deviation) of a portfolio…
A: Given: Weight 75% 25% Year Stock A Stock B 2010 -10% 16% 2011 5% 20% 2012 2% 26% 2013…
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: following table contains data to calculate forward rates using pure expectations theory. a) Find the…
A: Solved in excel using forward rate formulas
Q: An amount of money was deposited in the leader's savings fund: 8 annually, n amount of (8%)…
A: Given, Interest rate is 8% per annum compounded for every six months. It means, for example,…
Q: are used to measure the speed in which various accounts are converted into sales or cash. Select…
A: Correct Option is 'C' =Activity Ratios
Q: A savvy investor paid $6,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8%…
A: Current Price $ 6,000.00 Bond Price $…
Q: A manufacturing company is planning to install a new CO2 treatment module to the chimneys of its…
A: In the question , it is specifically stated that we can solve by any method of our own choice. Hence…
Q: You wish to evaluate which of the two equity funds delivered a better risk adjusted return in terms…
A: Sharpe ratios is calculated as excess return over the risk free rate divided by the standard…
Q: A smart watch is purchased with a down payment of P2,000 and the balance will be paid at P2,500…
A: Monthly payment (P) = P2500 Interest rate = 3% Monthly interest rate (r) = 3%/12 = 0.25% Number of…
Q: If $84,000 is invested in an annuity that earns 5.2%, compounded quarterly, what payments will it…
A: Investment (PV) = $84000 Interest rate = 5.2% Quarterly interest rate (r) = 5.2%/4 = 1.30% Period =…
Q: Over a four-year period, Pat purchased shares in the Barreau du Quebec Canadian Equity Fund as…
A:
Q: A stock price is currently $51. It is assumed that at the end of six months it will be either $30 or…
A: Binomial model is one of the methods of option pricing. It calculates the option price by…
Q: The following are the cash flows of two independent projects: Year Project A Project B 0 $…
A: Cost of capital = 12% Year Project A Project B 0 -270 -270 1 150 170 2 150 170 3 150 170…
Q: A $2400, 8.9% bond with semi-annual coupons redeemable at par in 8 years was purchased at 95.6.…
A: Because it is assumed that the book value trends in a straight line from the start value to the end…
Q: The bid-ask spread: a. Includes a transaction cost component to compensate liquidity providers…
A: Bid-ask spread can be explained as the difference between the price at which a trader is willing to…
Unit VIII question 12
Step by step
Solved in 4 steps
- Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.St. Johns River Shipyards welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. A new welder will cost 182,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from 27,000 to 74,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 25%, and the project cost of capital is 12%. What is the NPV if the firm replaces the old welder with the new one?Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
- Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.
- Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?
- Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. Dunedin buys equipment frequently and wants to print a depreciation schedule for each assets life. Review the worksheet called DEPREC that follows these requirements. Since some assets acquired are depreciated by straight-line, others by units of production, and others by double-declining balance, DEPREC shows all three methods. You are to use this worksheet to prepare depreciation schedules for the new machine.Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the life of the truck two years beyond the original estimated life. Related information is provided below. Cost of truck 65,000 Salvage value 5,000 Original estimated life 6 years The truck was purchased on January 1, 20-1. The engine was replaced on January 1, 20-6. Using straight-line depreciation, compute depreciation expense for 20-6.Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $5,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and it expects to deplete it over ten years (150 acres in year one, 300 acres in year two, 250 acres in year three, 150 acres in year four, and 100 acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.