and Manufacturing spends $20,000 to update the lighting in its factory to more energy-efficient LED fixtures. This will save the company $4,000 per year in electricity costs. The company estimates that these fixtures will last for 10 years. If the company’s cost of funds is 8%, what is the mo
Q: It keeps coming back incorrect and I can not figure out whY
A: Here, Invested value today (PV) = $2,985 Interest rate (RATE) = 5% compounded annually Time period…
Q: Which is a better offer? Provide your computation to prove your answer. 1. You need 120,000 to start…
A: Step 1: In this question we will be evaluating the loan credit of following since you need 120,000…
Q: Determine the DCPB based on a MARR rate of 8.0% Determine the IRR
A: Discounted payback period means discounting the cashflows to know when the initial investment period…
Q: Combined Communications is a new firm in a rapidly growing industry. The company is planning on…
A: We will apply the dividend discount model here. As per the dividend discount model the fair value or…
Q: Aloha, Inc., has 6 percent coupon bonds on the market that have 9 years left to maturity. If the YTM…
A: We will use the below formula to calculate the bond price Bond price =…
Q: In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe.…
A: Given, The purchase price is $24 Rate is 5.5%
Q: You are thinking of purchasing a house. The house costs $250,000. You have $36,000 in cash that you…
A: Monthly Installment = It includes a portion of principle payment along with Interest Monthly…
Q: 9. Implied interest rate and period Consider the case of the following annuities, and the need to…
A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…
Q: Alice takes a housing loan with 24 months to maturity, with a principal of 200,000. The interest…
A: Giving money to someone else in exchange for repayment of the principal plus interest is known as a…
Q: Which of the following statements is most accurate? A. Financial leverage is directly…
A:
Q: Which of the following is false? 1. When given the annual withdrawals desired during the retirement…
A: Fully amortizing payments are a specific kind of regular debt repayment. By the conclusion of the…
Q: You and your colleague, Adam, are currently participating in a finance internship program at…
A: We have to calculate the DOL, DFL and DTL. Then we have to see the impact on each of them if the…
Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…
A: The price of Stock can be calculated by using this Formula Stock Price…
Q: You form a risky-risky portfolio composed of two stocks: A and B. Stock Expected Return (mean)…
A: TBill Rate = 5% Expected Return = 15% Standard Deviation = 23.5385% Weight in 75A/25B = 20% Weight…
Q: A company estimates that it will need $114,000 in 11 years to replace a computer. If it establishes…
A: Futute Value of annuity = P * [ {(1 +r)n -1} / r ] Where P = Periodic payment N =time period r =…
Q: 5-20-The problem requires you to use File C05 on the computer problem spreadsheet. a.Assume today…
A: Given: Year Inflation rate Maturity risk premium Maximum Maturity risk premium Real risk free…
Q: When will a P12000 becomes P25000 with an interest rate of 15% compounded bi-monthly?
A: With more compounding of interest the effective interest goes on increasing and hence due to…
Q: Joshua borrowed P250,000.00 with interest at the rate of 5% compounded semi-annually. He agrees to…
A: Interest rate = 5% (Assumed for every 6 month) Loan amount = P250,000 Calculation of loan amount…
Q: A local entreprenuer asks you to invest $10,000 in a business venture. Based on your estimate, you…
A: Data given: Initial investment (Year 0) = $10,000 CF1=0 CF2=0 CF3=0 CF4=$4900 CF5=$14500
Q: A customer has 3 application options and wants to know which is the best option. - Savings that…
A: As the given options are on different time lines, Interest rates should be converted to per annum…
Q: An investor short sells 250 shares of a stock for $43 per share. The initial margin is 60%. Ignoring…
A: Initial margin The amount kept aside to protect from the risk of the counterparty is known as the…
Q: 3. The maker of cardboard boxes leases a warehouse and pays $7,000 at the beginning of each month…
A: Note: Hi! Thank you for the question, As per the Honor code, we are allowed to answer one question…
Q: You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for…
A: Present value of uneven cashflows means cash flows are not even, cashflows are discounted by using…
Q: A Treasury STRIPS matures in 7 years and has a yield to maturity of 9.4 percent. Assume the par…
A: Treasury strips refer to the bonds that is to be sold at the fair value in the market and at the…
Q: Consider a European put with an exercise (strike) price of 5.00 and with 6 months to maturity. The…
A: Put options: Put options are derivative instruments that give their holders the right, but not the…
Q: Isn't the maturity value/principal is what we are looking for? F = Pr/(1-DT)?
A: Discount depends on the policy of the bank.
Q: . Global Enterprises has just signed a $3 million contract. The contract calls for a payment of $.5…
A: Required return = 12% Year Cash flow 0 500000.00 1 900000.00 2 1600000.00
Q: A mortgage contract for $48,600 written 10 years ago is just at the end of its second five-year…
A: The amortization period is the amount of time it would take to pay off a mortgage in full if regular…
Q: The Evanec Company's next expected dividend, D1, is $2.83; its growth rate is 6%; and its common…
A: The cost of capital is the cost of using funds in the business. This may be in the form of equity or…
Q: The primary purpose of the balance sheet is to: measure the net income of a busniess up to a…
A: Balance sheet is a financial statement and it reports assets, liabilities and shareholder equity of…
Q: A stock had a return of 6.8 percent last year. If the inflation rate was 1.2 percent, what was the…
A: Nominal rate = 6.8% Innflation rate = 1.2%
Q: The Board of Voyager, Inc. has authorized for sale 10,000 shares of common stock at a price of…
A: Solution:- Authorised shares represent the maximum number of shares that a company has in its…
Q: If the discount rate is 10 percent, what is the present value of these cash flows? 3542.76
A: Information Provided: Year 1 CF = $950 Year 2 CF = $1050 Year 3 CF = $1320 Year 4 CF = $1200…
Q: Problem 2: The expenses of a venture is shown below. If the interest rate is 14.06% per year…
A: Annual worth : The annual worth is the net of all the benefits that we have received over a period…
Q: What is the present equivalent of Php 750,000 to be received in 18 years when the interest rate is…
A: Using a PV formula, we can determine the present equivalent of an amount. PV = FV(1+r)n Where FV =…
Q: a. Consider a portfolio, made up by selling short $10,000 of Contravent stocks and buying $10,000 of…
A: Information Provided: Shorting Contravent stock = $10,000 Buying Sensor stock = $10,000 Buying…
Q: 14. Loan amortization and capital recovery After Shipra got a job, the first thing she bought was a…
A: First, Yearly installment needs to be calculated Solved using Financial Calculator PV = 25,000 N =…
Q: Which of the following statements is not true about mortgages? O Mortgages are examples of amortized…
A: Mortgages are loans given to an individual to buy a property. These are usually long-term loans…
Q: If your primary goal is current yield, which one of these bonds is the wiser investment? Bond A:…
A: Current yield refers to the annual income from an investment divided by the current price. It is…
Q: Efficiency Ratios a) Asset Tumover Ratio b) Fixed Asset Turnover Ratio c) Accounts Receivable…
A: As per Bartleby guidelines,If a question with multiple sub-parts are posted, first 3 sub-parts will…
Q: In a loan by $5 000 000,00, with a rate of interest of 28 % a five years term, payable to the end of…
A:
Q: 10. To save for a new kitchen equipment, Jeff decided to deposit Php10,000 at the end of each month…
A: Annuity referes to regular stream of cash flows which occurs for a defined period. When cash flows…
Q: Determine the present value P you must invest to have the future value A at simple interest rate r…
A: Answer - Formula for calculating Present value PV = FV( 1/1+r)n PV = Present Value FV = Future…
Q: QUESTION 5 Your firm has net income of $343 on total sales of $1,360. Costs are $750 and…
A: 5. Net income = $343 Depreciation = $120 Operating cash flow = ? 6. Discount rate = 0.10 Present…
Q: Ler Tax Y What price should the municiple bond trade at in order to have a YTM 70 basis points above…
A: Given: Muni Bond Treasury bond Price $1,069.28 Price 1150 Coupon rate 5% Coupon rate 6%…
Q: Herring Corporation has opetating income of$250,000and a25%tax rate. The firm las short-term debt…
A: Here, To Find: Return on invested capital =?
Q: The XYZ company is a US-based MNC & deals with various financial instruments as its core business…
A: Speculators and arbitrageurs: Speculators take positions in a security with the aim of making a…
Q: Determine the present value P that must be invested to have the future value A at simple interest…
A: To calculate the present value we will use the below formula A = P+(P*r*t) Where A - Future value…
Q: Phoebe sued Phyllis and was granted judgment on October 25, Year 1, totaling $9,741.62 inclusive of…
A: Data given: Date of judgement = October 25 (Year 1) Grant awarded (inclusive of the judgment,…
Q: Use the following information to answer questions 23 - 24. Consider a three-factor model. You are…
A: The rate of return of the stock has been modelled using the three factor model. We have to find the…
Westland Manufacturing spends $20,000 to update the lighting in its factory to more energy-efficient LED fixtures. This will save the company $4,000 per year in electricity costs. The company estimates that these fixtures will last for 10 years. If the company’s cost of funds is 8%, what is the modified IRR of this project?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 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.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.If a garden center is considering the purchase of a new tractor with an initial investment cost of $120,000, and the center expects a return of $30,000 in year one, $20,000 in years two and three. $15,000 In years four and five, and $10,000 in year six and beyond, what is the payback period?
- A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.Manzer Enterprises is considering two independent investments: A new automated materials handling system that costs 900,000 and will produce net cash inflows of 300,000 at the end of each year for the next four years. A computer-aided manufacturing system that costs 775,000 and will produce labor savings of 400,000 and 500,000 at the end of the first year and second year, respectively. Manzer has a cost of capital of 8 percent. Required: 1. Calculate the IRR for the first investment and determine if it is acceptable or not. 2. Calculate the IRR of the second investment and comment on its acceptability. Use 12 percent as the first guess. 3. What if the cash flows for the first investment are 250,000 instead of 300,000?
- The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has an initial after-tax cost of 170,000. The project will produce 1,000 cases of mineral water per year indefinitely, starting at Year 1. The Year-1 sales price will be 138 per case, and the Year-1 cost per case will be 105. The firm is taxed at a rate of 25%. Both prices and costs are expected to rise after Year 1 at a rate of 6% per year due to inflation. The firm uses only equity, and it has a cost of capital of 15%. Assume that cash flows consist only of after-tax profits because the spring has an indefinite life and will not be depreciated. a. What is the present value of future cash flows? (Hint: The project is a growing perpetuity, so you must use the constant growth formula to find its NPV.) What is the NPV? b. Suppose that the company had forgotten to include future inflation. What would they have incorrectly calculated as the projects NPV?Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 25%. What is the initial investment outlay? The company spent and expensed $150,000 on research related to the new product last year. What is the initial investment outlay? Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line would be set up in unused space in the main plant. The machinerys invoice price would be approximately 200,000, another 10,000 in shipping charges would be required, and it would cost an additional 30,000 to install the equipment. The machinery has an economic life of 4 years, and Shrieves has obtained a special tax ruling that places the equipment in the MACRS 3-year class. The machinery is expected to have a salvage value of 25,000 after 4 years of use. The new line would generate incremental sales of 1,000 units per year for 4 years at an incremental cost of 100 per unit in the first year, excluding depreciation. Each unit can be sold for 200 in the first year. The sales price and cost are both expected to increase by 3% per year due to inflation. Further, to handle the new line, the firms net working capital would have to increase by an amount equal to 12% of sales revenues. The firms tax rate is 25%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. Define incremental cash flow. (1) Should you subtract interest expense or dividends when calculating project cash flow? (2) Suppose the firm spent 100,000 last year to rehabilitate the production line site. Should this be included in the analysis? Explain. (3) Now assume the plant space could be leased out to another firm at 25,000 per year. Should this be included in the analysis? If so, how? (4) Finally, assume that the new product line is expected to decrease sales of the firms other lines by 50,000 per year. Should this be considered in the analysis? If so, how?