Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 12, Problem 10E
To determine
Concept Introduction:
The Net Present Value technique is a discounted of cash flow method, that considers the time value of money in evaluating capital investments.
The Net Present Value method uses a specified discount rate to bring all subsequent net
Net present value
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Net Present Value Analysis
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $13,000 for 200 shares of Malti Company’s common stock. She received a $420 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $16,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company stock provided a 14% return and would like some help with the necessary computations.
Required:
1. Compute the net present value that Kathy earned on her investment in Malti Company stock Round your answer to the nearest whole dollar.
2. Did the Malti Company stock provide a 14% return?
Q) Ginna earned a return of 12% on his coupon bond holdings this year. The value of these holdings is currently $15,000. At the start of the year, the value was $14,000. What was the dollar value of income earned?
Solve it early and correctly.
But not solve in excel works.
Last year, Julie Johnson bought one share of common stock for $950. During the year, Julie received a $60.50 dividend. Earlier today, she sold the stock for $976.
What rate of return did Julie earn on her investment? Round your answer to two decimal places.
_______ %
What were the dividend yield and the capital gains yield associated with holding the stock? Round your answers to two decimal places.
Dividend yield: _______ %
Capital gains yield: _______ %
Chapter 12 Solutions
Introduction To Managerial Accounting
Ch. 12.A - Basic Present Value Concepts Annual cash inflows...Ch. 12.A - Basic Present value Concepts Julie has just...Ch. 12.A - Prob. 3ECh. 12.A - Prob. 4ECh. 12.A - Basic Present Value Concepts The Atlantic Medical...Ch. 12.A - Prob. 6ECh. 12 - What is the difference between capital budgeting...Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4Q
Ch. 12 - Why are discounted cash flow methods of making...Ch. 12 - Prob. 6QCh. 12 - Identify two simplifying assumptions associated...Ch. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - Prob. 10QCh. 12 - Prob. 11QCh. 12 - Prob. 12QCh. 12 - How is the project profitability index computed,...Ch. 12 - Prob. 14QCh. 12 - Prob. 15QCh. 12 - Prob. 1AECh. 12 - The Excel worksheet form that appears below is to...Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Prob. 3F15Ch. 12 - Prob. 4F15Ch. 12 - Prob. 5F15Ch. 12 - Prob. 6F15Ch. 12 - Prob. 7F15Ch. 12 - Prob. 8F15Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Prob. 11F15Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Prob. 13F15Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Cardinal Company is considering a five-year...Ch. 12 - Payback Method The management of Unter...Ch. 12 - Net Present Value Analysis The management of...Ch. 12 - Internal Rate of Return Wendell’s Donut Shoppe is...Ch. 12 - Uncertain Future Cash Flows Lukow Products is...Ch. 12 - Prob. 5ECh. 12 - Simple Rate of Return Method The management of...Ch. 12 - Prob. 7ECh. 12 - Payback Period and Simple Rate of Return Nicks...Ch. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Preference Ranking of Investment Projects Oxford...Ch. 12 - Prob. 12ECh. 12 - Payback Period and Simple Rate of Return...Ch. 12 - Comparison of Projects Using Net Present Value...Ch. 12 - Internal Rate of Return and Net Present Value...Ch. 12 - Net Present Value Analysis Windhoek Mines, Ltd.,...Ch. 12 - Net Present Value Analysis; Internal Rate of...Ch. 12 - Net Present Value Analysis Oakmont Company has an...Ch. 12 - Simple Rate of Return; Payback Period Paul Swanson...Ch. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - Comprehensive Problem - Lou Barlow, a divisional...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26PCh. 12 - Net Present Value Analysis In five years, Kent...Ch. 12 - Prob. 28PCh. 12 - Prob. 29P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- An investor is thinking about buying some shares of Health Diagnostics, Inc., at $75 a share. She expects the price of the stock to rise to $115 a share over the next three years. During that time, she also expects to receive annual dividends of $4 per share. Assuming that the investor’s expectations (about the future price of the stock and the dividends that it pays) hold up, what rate of return can the investor expect to earn on this investment? (Hint: Use either the approximate yield formula or a financial calculator to solve this problem.)arrow_forwardJonathan purchased some corporate stock 8 years ago for $12,000. He received quarterly dividends of $225 at the end of each quarter for the first 5 years, nothing for the sixth year, and $250 at the end of each quarter for the last 2 years. Immediately after receiving the last quarterly dividend, Jonathan sold the stock for $15,385. What was his annual rate of return? (IRR) Round your rate to the nearest tenth of a percent.arrow_forwardAssist with this question part a and b A year ago, you purchase 300 shares of IXC Technologies, Inc .stock at a price of $9.00 per share.The stock paid an annual dividend of $0.27 per share. Today, you sold all your shares for $ 16.20 per share. a) What is your total dollar return on this investment? b) Calculate dividend yield, capital yield and total rate of return for the year.arrow_forward
- Darlene wishes to purchase 200 shares of The-Smart-One Inc. in 4 years from now. The-Smart-One paid a dividend of $2.25 per share last year (t = 0). It is expected that the dividend will grow at a rate of 2% for this and the next year (t = 1 and t = 2 respectively), after which it will settle into a 1% growth rate for an indefinite time in future. Darlene requires a return of at least 6% from her investment. Question 1: How much will be the total cost of Darlene's purchase of 200 shares 4 years from now? Question 2: How much does Darlene need to deposit in her bank today so that she has $9,680 in her account by the time she is ready for her stock purchase. Assume that the bank pays 1.75% p.a. on deposits. Question 3: If Darlene wanted to make annual deposits at the end of each year to accumulate $9,680, how much would she need to deposit each year? Question 4: Which of the two type of deposits will be better?arrow_forwardDarlene wishes to purchase 200 shares of The-Smart-One Inc. in 4 years from now. The-Smart-One paid a dividend of $2.25 per share last year (t = 0). It is expected that the dividend will grow at a rate of 2% for this and the next year (t = 1 and t = 2 respectively), after which it will settle into a 1% growth rate for an indefinite time in future. Darlene requires a return of at least 6% from her investment. Question 1: How much will be the total cost of Darlene's purchase of 200 shares 4 years from now? Answer: Each share will cost $48.40 and the total cost of purchase will be $9,680 Question 2: How much does Darlene need to deposit in her bank today so that she has $9,680 in her account by the time she is ready for her stock purchase. Assume that the bank pays 1.75% p.a. on deposits. Answer: $9,031.04 Question 3: If Darlene wanted to make annual deposits at the end of each year to accumulate $9,680, how much would she need to deposit each year? Answer: $2,357.39 each year Question 4:…arrow_forwardLast year, Julie Johnson bought one share of common stock for $950. During the year, Julie received a $47.50 dividend. Earlier today, she sold the stock for $988. (a) What rate of return did Julie earn on her investment? (b) What were the (1) dividend yield and (2) the capital gains yield associated with holding the stock? Your broker offers to sell you shares of Wingler & Company common stock, which paid a dividend of $2 yesterday. You expect the dividend to grow at a rate of 5 percent per year into perpetuity. If the appropriate rate of return for the stock is 12 percent, what is the market value of Wingler’s stock? Ocala Company’s stock is currently selling for $19.50 per share. At the end of the year, the company plans to pay a dividend equal to $2.34 per share. For the remainder of the company’s life, dividends are expected to grow at a constant rate, and investors are expected to require a 16 percent return to invest in Ocala’s stock. What should be the value of…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Investing For Beginners (Stock Market); Author: Daniel Pronk;https://www.youtube.com/watch?v=6Jkdpgc407M;License: Standard Youtube License