The management of Deitrich Inc., a civil engineering design company, is considering an investment in a high-quality blueprint printer with the following cash flows: Year 1234567890 Investment Cash Inflow $28,000 $2,000 $4,000 $3,000 $6,000 $8,000 $9,000 $8,000 $6,000 $5,000 $4,000 $4,000 I Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year was several times larger?
Q: What annuity over a 10-year period at 8% interest is most nearly equivalent to the present worth of…
A: To calculate the annuity amount we will use the below formula Annuity amount = PV/[{1-(1+r)-n}/r]…
Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 8.50%, and the risk-free…
A: Fiske Roofing Supplies stock has beta 1.23, required return is 8.50% risk free rate is 4.30% , then…
Q: What is the interest rate on a Canada Student Loan on the federal portion if the prime rate is 5%?…
A: In this question we will be calculating the student loan rate in canada when prime rate is given…
Q: Alternative Trading System is a trading destination that does not publicly display any of their…
A: Alternative Trading Systems (ATSs) are non-exchange trading venues that provide traders with an…
Q: Ethical issues in finance are important because they bear on our financial well-being. Ethical…
A: A financial market is a marketplace that provides opportunities for businesses to supplement their…
Q: Calculate the finance charge (in $) and the annual percentage rate for the installment loan by using…
A: Amount Financed = pv = $18,500 Number of payment = nper = 72 Monthly payment = pmt = $424.08
Q: Hollister & Hollister is considering a new project. The project will require $522,000 for now fixed…
A: The process of analyzing and evaluating any project's feasibility and profitability is regarded as…
Q: Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its pain-reliever…
A: Initial cost includes the cost of equipment, installation cost and increase in net working capital.…
Q: i $8,000 is invested in a certain business at the start of the year, the investor will receive…
A: The net present value of a project is the sum of the discounted cash inflows less the cost of the…
Q: What is the effective cost of this loan if you pay it off at the end of year 2?
A: The effective cost of an Adjustable Rate Mortgage (ARM) if it is paid off at the end of year 2. An…
Q: Find the effective annual yield (EAY) on an 8-year bond that you bought three years ago and paid…
A: Bonds are instruments that are issued by a company to raise debt capital from investors. A feature…
Q: The rate of return on the common stock of Flowers by Flo is expected to be 14 percent in a boom…
A: Given :
Q: Assets ITEM Total Cash & Due from Banks Cash & Due from Banks Growth Investments - Total Investments…
A: We will be calculating asset management ratio from the year 2018 to 2021
Q: At the time of her grandsons birth, a grandmother deposits 8,000 in an account that pays 2%…
A: Given, PV=Deposits= $8000 Rate(r)=6.5% (compounded monthly) Monthly rate=2%12=0.001667 No. of…
Q: A ten-year, zero-coupon bond with a yield to maturity of 6.9% has a face value of $5,000. An…
A: Given: YTM of zero coupon bond = 6.9% Face value = $5,000 Years to maturity, n = 10 years The…
Q: A corporation creates a sinking fund in order to have $640,000 to replace some machinery in 8 years.…
A: It is a case of calculating the future value of a quarterly annuity. Here, the future value is…
Q: How has the stock market been effected since the closure of Silicon calls bank ? What is the…
A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…
Q: Vigour Pharmaceuticals Ltd. is considering investing in a new production line for its pain-reliever…
A: The weighted average cost of capital(WACC) is a financial metric used to calculate the average cost…
Q: Use $1.40 per gallon for gasoline and 12,000 miles per year and comp the amount of money in a bank…
A: In this question ,we will be drawing a graph of the amount of bank savings and the amount of…
Q: Zacher Co.'s stock has a beta of 0.90, the risk-free rate is 4.25%, and the market risk premium is…
A: Beta = b = 0.90 Risk free rate = rf = 4.25% Market risk premium = mrp = 5.50%
Q: eynolds Construction's current value of operations is $750 million based on the free cash flow…
A: Firm's Equity value is total value of firm which is owned by equity investors only. It will be…
Q: Presently, Stock A pays a dividend of $1.00 a share, and you expect the dividend to grow rapidly for…
A:
Q: Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The…
A: a. Calculation of EPS if EBIT is $10,000 Cain Able EBIT $10,000.00 $10,000.00 Less:…
Q: Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the…
A: According to the unbiased expectations theory, the current (long-term) rate for a specific maturity…
Q: The debt is amortized by equal payments made at the end of each payment interval Compute (a) the…
A: Amortized loan payment is a kind of loan taken by borrower in which the payment for loan repayment…
Q: Nick Strizzi owns and operates a pizza delivery and take-out restaurant. In 2013, he sold 100,000…
A: Income Statement is that which provide the net result of the particular period. we can prepare the…
Q: If a person spends $12 a week on coffee (assume $600 a year), what would be the future value of that…
A: In the given question we require to compute the future value. Where, Present value = $600 r =…
Q: Riverside Inc. plans to purchase or lease $220,000 worth of new equipment. If purchased, the…
A: Equipment cost = $220,000 Annual lease payments = $55,000 Borrowing cost = 8% Tax rate = 35%
Q: After paying premiums for 24 years, Chad forgot to pay his 25th year annual premium due on January…
A: Insurance policy: A contract between an insurance company and a policyholder that provides financial…
Q: Atlas Builders deals strictly with five customers. The average amounts these customers pay per month…
A: A company's sales receipts may vary during different times of the year. In order to even out these…
Q: At the time of her grandsons birth, a grandmother deposits 3000 in an account that pays 6.5%…
A: Data given PV=Deposits= $3000 (Assumed $) r=rate=6.5% (compounded monthly) n=21 years Working…
Q: On Friday 26th January 2018, the UK government held its weekly auction of government Treasury bills.…
A: Discount rates refers to the interest rate at minimum level while lending finance to the other…
Q: Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new…
A: The minimum rate of return on the loan money that the corporation has raised is called the cost of…
Q: A company has a bank loan outstanding that requires it to make annual payments of $1,000,000 at the…
A: Effective annual rate with quarterly compounding is calculated below Effective annual rate= 1+APRmm…
Q: For Finance class: What are the equations to use for end-of-year price per share? Turnover…
A: The end-of-year share price is the price of a stock or a share at the end of a given year. The…
Q: Silicon Mountain Bank owns $100,000,000 of 20 year annual pay bonds with a coupon of 2%. If interest…
A: When the interest rate increases, then the value of bonds decreases. It means that at a higher…
Q: How does context influence your communication?
A: Introduction: Context is an important factor that affects the way we communicate. It can influence…
Q: Your investment club has only two stocks in its portfolio. $50,000 is invested in a stock with a…
A: Beta of portfolio is weighted average beta of all stocks in portfolio. Stock 1 Value = $50,000…
Q: Part I: You are considering the purchase of a new SUV for $47,484. You have saved $3,500 which you…
A: Monthly payment refers to the periodic payment extended by the borrower against loan repayment. It…
Q: Answer ALL parts of this question. The data below describes a three-stock financial market that…
A: Stock market refers to a market where the trading of stock between buyers and sellers has been…
Q: Question 9 Instructions: Make sure you are calculating this based on the Accounting Rate of Return…
A: Accounting rate of return is one of the technique used in capital budgeting. It means how much rate…
Q: A Real Estate Investment Company (REIC) has a weighted average cost of capital at 10% and $2 million…
A: The best option would be the one that generates the highest Return on Investment (ROI), which can be…
Q: A bond paying 5% coupons semiannually and YTM of 4.5% and 12 years to maturity. If the last interest…
A: Sometimes, an investor may purchase a bond after the coupon payment date. In this case, he will not…
Q: Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to…
A: When a company comes up with a new issue of securities, it incurs costs like underwriting, legal…
Q: What is the dollar cost of this debt to Flatiron Group if, instead, the pound appreciates from…
A: An amount is borrowed in foreign currency. The exchange rate changes since then. The cost of debt in…
Q: What is the value of the bond in the table? years to maturity coupon rate yield to maturity 25…
A: Coupon payments are the interest payments made to the holder of the bond till its maturity date.…
Q: A company had $16 of sales per share for the year that just ended. You expect the company to grow…
A: The free cash flow to equity model is one of the ways to value a stock and is based on the idea that…
Q: Jackson & Sons uses packing machines to prepare its products for shipping. They need to replace…
A: It is a problem that requires annual worth analysis to identify the best alternative. It is…
Q: How long will it take money to triple if it is invested at 7% compounded quarterly? 8.7% compounded…
A: Data given: Rate=7% compounded quarterly Rate=8.7% compounded continuously Required: Time required…
Q: Booher Book Stores has a beta of 0.9. The yield on a 3-month T-bill is 5% and the yield on a 10-year…
A: Given: Beta = 0.9 Risk free rate = 6% Market risk premium = 7.5%
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Investment Cash Inflow Year 1234567899 10 $ 15,000 $ 1,000 $ 8,000 $ 2,000 $ 2,500 $ 4,000 $ 5,000 $ 6,000 $ 5,000 $ 4,000 $ 3,000 $ 2,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period 15.0 yearsThe management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1234567899 10 $ 30,000 $ 1,000 $ 3,000 $ 2,000 $ 4,000 $ 5,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $ 1,000 $ 1,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period yearsThe following information is provided by Doppler Systems: Project A Project B Project C Project D Initial investment $440,000 $202,000 $550,000 $506,000 PV of cash inflows $570,000 $394,000 $816,000 $406,000 Payback period (years) 3.6 3.2 4.0 20 NPV of project $130,000 $192,000 $266,000 $100,000 Calculate the profitability index for Project A. (Round your answer to two decimal places.) 1.09 1.67 0.85 1.30
- 1. Green Rose Inc. is considering these following investments for year 2022: Machine A Machine B Machine C Initial amount 450,000 375,000 425,000 Salvage Value 75,000 67,000 58,000 Cost savings 66,730 73,425 63,950 The following cost are associated to each of the machines: • Inspection cost 3,000 • Installation cost 3.500 • Warranties 2,700 • Testing cost 4,300 • Training 4,500 a) Determine the Net investment of each Machine. b) Determine the accounting rate of return. c) Which of these investments would Green Rose Inc. purse if the required rate of return is 18%?5.The following information is provided by Pemberton Systems: Project A $434,000 $572,000 3.6 Project B $200,000 $396,000 Project C Project D Initial investment PV of cash inflows $568,000 $510,000 $808,000 $402,000 4.0 Payback period (years) NPV of project 3.2 2.0 $138,000 $196,000 $240,000 $108,000 Which project has the highest profitability index?Vista Limited intends purchasing a new machine and has a choice between the following two machines:Equipment AEquipment BInitial costR220 000R240 000Expected useful life5 years5 yearsScrap valueNilNilExpected net cash inflows:RREnd of:Year 155 00070 000Year 260 00070 000Year 362 00070 000Year 460 00070 000Year 570 00070 000The company estimates that its cost of capital is 12%. Calculate the Internal Rate of Return of Equipment B.
- Perit Industries has $155,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 155,000 $ 25,000 $ 8,600 6 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? X Answer is complete but not entirely correct. Project B $0 $ 155,000 $ 40,000 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount. 2. Compute the net present value of Project B. $(53,971) 70,527 X Project B $0…Vista Limited intends purchasing a new machine and has a choice between the following two machines:Equipment AEquipment BInitial costR220 000R240 000Expected useful life5 years5 yearsScrap valueNilNilExpected net cash inflows:RREnd of:Year 155 00070 000Year 260 00070 000Year 362 00070 000Year 460 00070 000Year 570 00070 000The company estimates that its cost of capital is 12%. Required:2.1 Calculate the Payback Period of both equipment. (Answers must be expressed in years, months and days). 2.2 Calculate the Accounting Rate of Return (on initial investment) for both equipment A and B. (Answers must be expressed to 2 decimal places). 2.3 Calculate the Net Present Value of each equipment. (Round off amounts to the nearest Rand.) 2.4 Calculate the Internal Rate of Return of Equipment B.METHODS THAT CONSIDER TIME VALUE OF MONEY Two investment proposals have been made and the following data thereon are given: Project ALPHA Project BETA Investment P123,417 P155,934 Depreciable assets included in the investment figure 60,000 72,000 Economic life 8 years 12 years Annual sales revenue P65,000 P78,000 Annual out-of-pocket operating cost 36,000 42,500 Income tax rate 35% Cost of capital 10% Determine which proposal is the better one based on: a. Internal rate of return b. Net present value c. Profitability index d. Discounted payback period
- NPV A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $437,200. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two independent projects are as follows: Year MRI Equipment Biopsy Equipment 1 $214,000 $60,000 2 90,000 42,000 3 173,000 94,000 4 109,000 199,000 5 46,000 271,000 The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: Compute the net present value of each project, assuming a required rate of 12 percent. If the NPV is negative, enter your answer as a negative value. NPV MRI equipment $fill in the blank 1 Biopsy equipment $fill in the blank 2The company is considering three capital investment proposals. At this time the company only has funds available to pursue one of the three investments. Equipment A Equipment B Equipment CPresent value of net cash inflows $1,695,000 $1,960,000 $2,200,000Initial investment ($1,500,000) ($1,750,000) ($2,000,000)Net present value $195,000 $210,000 $200,000*initial investment is the amount invested A. Calculate the Present value index (or profitability index) for each project. B. Which investment should they choose and why?Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon in order to copy its content into a spreadsheet. Category T₁ Investment Net working capital change Operating cash flow Salvage To - $10,244,762 - $569,000 $3,277,000 What is the IRR of the project? 10.5% (Round to two decimal places.) T2 $3,884,000 T3 $569,000 $4,570,000 $615,000 At what adjusted WACCS will the company accept this project? Hint: Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project.