Calculate the amount of money that will be in each of the following accounts at the end of the given deposit? period: Account Holder Amount Deposited Annual Interest Rate Compounding Periods Per Year (M) Compounding Periods (Years) Theodore Logan III $1,000 12% 4 10 Vernell Coles $96,000 8% 12 3 Tina Elliot $8,000 12% 6 6 Wayne Robinson $122,000 10% 1 3
Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .65. It’s considering building a new $74 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $8.9 million in perpetuity. The company raises all equity from outside financing. There are three financing options: 1
an additional 1 at the end of every 2. A perpetuity pays 1 at the end of every year plus second year. The present value of the perpetuity is K for i 20. Determine K 3 (D) 2i i+3 i+2 ?+1 (A) i(i 2) [+! (B) i(i1 E) i(i2)
You just received a bonus of ?$ 3, 000. a.??Calculate the future value of ?$ 3, 000?, given that it will be held in the bank for 10 years and earn an annual interest rate of 6 percent. b.??Recalculate part ?(a?) using a compounding period that is? (1) semiannual and? (2) bimonthly. c.??Recalculate parts ?(a?) and ?(b?) using an annual interest rate of 12 percent. d.??Recalculate part ?(a?) using a
Would you accept a project which is expected to pay $10,000 a year for seven years if the initial investment is $40,000 and your required return is 15%?
Your company wants to invest $250,000 in a new machine. Cash flows that result are: Yr1: 50,000; Yr2: 121,000; Yr3: 86,000; Yr4: 100,000. Cost of capital is 14%. What is the NPV? Calculate the NPV: Investment amount: ($8,250,000). Cash flows: Yr1: 2,500,000; Yr2: 3,500,000; Yr3: 4,500,000; Yr4: 5,500,000. Cost of capital: 24% For the following, calculate the NPV: Investment amount: ($1,000,000). C
?Your grandmother asks for your help in choosing a certificate of deposit? (CD) from a bank with a? one-year maturity and a fixed interest rate. The first certificate of? deposit, CD? #1, pays 2.95 percent APR compounded annually?, while the second certificate of? deposit, CD? #2, pays 3.00 percent APR compounded daily. What is the effective annual rate? (the EAR) of each? CD, and which CD do you
?You are offered ?$ 80, 000 today or ?$ 320, 000 in 11 years. Assuming that you can earn 13 percent on your? money, which should you? choose? If you are offered ?$ 320, 000 in 11 years and you can earn 13 percent on your? money, what is the present value of ?$ 320, 000??
assume that in January 2017 the average house price in a particular area was $308,700. in January 2000, the average price was 198,300. what is the annual increase in selling price?
Lance Murdock purchased a wooden statue of a Conquistador for $ 7, 700 to put in his home office 9 years ago. Lance has recently? married, and his home office is being converted into a sewing room. His new? wife, who has far better taste than? Lance, thinks the Conquistador is hideous and must go immediately. Lance decided to sell it on? e-Bay and only received ?$5 comma 100 for? it, and so he too
An investor plans to borrow $20,000. The loan will be repaid in 5 annual payments. The interest rate charged is 7%. Find the loan payment and amortize the loan Use formulas and show step by step with calculations.
A friend is planning to purchase a new car for $35,000 and intends to borrow money to finance the entire purchase. She has asked you to compare the following options and to let her know which one you think is best: option I: $5000 price reduction, plus a four-year loan, with monthly payments. The annual interest rate on the loan will be 5%. Option II: A zero interest loan, with a 4-year term and m
River Cruises is all-equity-financed. Current Data Number of shares 100,000 Price per share 10 Market value of shares $1,000,000 State of the Economy Slump 76,000 Normal ?oom Profits before interest 127,000 188,500 Suppose it now issues $250,000 of debt at an interest rate of 10% and uses the proceeds to repurchase 25,000 shares. Assume that the firm pays no taxes and that debt finance has no imp
can someone help me explain why answer is wage will decline? 0/1 pts Question 1 When output is below its full-employment level, the short-run aggregate supply curve will shift down and to the right because Correct Answer workers' wages will decline. You Answered Oprices of nonlabor inputs will rise. workers' wages will rise the expected price level will be below the actual price level.
If Stock A has an expected dividend of $3.00, a growth rate of 3%, and a return of 7%, use formulas and show all steps and calculations what is its current price? What would stock A’s price be one year from now? Show that stock A’s dividend yield is 4% and its capital gain yield is 3%
Digital Fruit is financed solely by common stock and has outstanding 28 million shares with a market price of $20 a share. It now announces that it intends to issue $190 million of debt and to use the proceeds to buy back common stock. There are no taxes. a. What is the expected market price of the common stock after the announcement? per Market price share b. How many shares can the company buy
Ronen Consulting has just realized an accounting error that has resulted in an unfunded liability of ?$370, 000 due in 29 years. In other? words, they will need ?$ 370, 000 in 29 years. Toni? Flanders, the? company's CEO, is scrambling to discount the liability to the present to assist in valuing the? firm's stock. If the appropriate discount rate is 8 ?percent, what is the present value of the? l
Variable Dividend Stock is expected to pay dividends of $2, $,2, $,3, $4, and $4 over the next five years. After that the dividend is expected to grow at a constant rate of 4%. If the return on the stock is 9%, what is the price? Use formulas and show step by step with calculations.
Soggy Donuts has just announced that it will pay a $4 dividend for each of the next 4 years, a $3 dividend for two years after that and then stop dividends altogether. If the company’s required return is 10% what is the stock worth? Use formulas and show all steps and calculations.
(Inflation and interest rates?)? You're considering an investment that you expect will produce a return of 1010 percent next? year, and you expect that your real rate of return on this investment will be 44 percent. What do you expect inflation to be next? year? The expected inflation rate next year will be __ %
?How many years will it take for ?$480 to grow to ?$1 019.25 if? it's invested at 5 percent compounded? annually? The number of years it will take for ?$480 to grow to ?$1 019.25 at 5 percent compounded annually is
A project has an initial cost of $18,400 and expected cash inflows of $7,200, $8,900, and $7,500 over Years 1 to 3, respectively. What is the discounted payback period if the required rate of return is 11.2 percent?
You are the project leader for a development team considering developing a software product for tracking blood donations. Market analysis suggests your company could make profits of $125,000 for the first year and then profits decrease by 6% annually. You will sell this software product for 4 years. To cover the software product development costs right now, your company would withdraw money from a
Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.9. There are 2 million common shares outstanding. The market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. BOOK-VALUE BALANCE SHEET (Fi
?Sarah Wiggum would like to make a single investment and have $2.3 million at the time of her retirement in 30 years. She has found a mutual fund that will earn 5 percent annually. How much will Sarah have to invest? today? If Sarah earned an annual return of 14 percent .how soon could she then? retire?. If Sarah can earn 5percent annually for the next 30 ?years, the amount of money she will have
Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.9. There are 3 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firm's tax rate is 40% BOOK-VALUE BALANCE SHEET (Figures
hi, I don't know why the answer is an increase in consumber confidence. Can you explain toe me why A,B and C is right? Which of the following would NOT cause the IS curve to shift to the left? a decrease in government purchases You Answered a decrease in the expected future profitability of capital a decrease in foreign demand for domestic products Correct Answer an increase in consumer confidence
Present value concept Answer each of the following questions. a. How much money would you have to invest today to accumulate $4,300 after 4 years if the rate of return on your investment is 13% b. What is the present value of $4,300 that you will receive after 4 years if the discount rate is 13%? the most you would spend today for an investment that will pay $4,300 in 4 years if your opportunity
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if $4,000 is deposited initially at 12% annual interest for 5 years, and (2) determine the effectivee annual rate (EAR) Annual Compounding (1) The future value, FVn, is $ (Round to the nearest cent.) compounded annually, the EAR is%. (Round to two decimal places.) (2) If the
Retirement planning Personal Finance Problem Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,400 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will earn a retum of 14% over the next 40 years. a. If Hal makes end-of-year $2,400 deposits into the IRA, how much will he have ac
Deposits to accumulate future sums For the case shown in the following table, determine the amount of the equal, end-of-year deposits necessary to accumulate the given sum at the end of the specified period, assuming the stated annual interest rate. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Sum to be Accumulation
If a company always uses retained earnings to fund capital equipment, is the cost of capital irrelevant? Explain your answer.
to December 2017. The company has projected 1. A company is working on a cash budget for July the following cash collections and payments: Collections Payments Month Miscellaneous Expenses Cash Sales Credit Sales Purchases Wages $20,000 $24,000 $15,000 $18,000 July August September October $10,000 $6000 $1,500 $2,000 $2,500 $3,000 $12,000 $7,200 $8,400 $9,600 $28,000 $32,000 $40,000 $50,000 $21,0
Problem 4-03 (Algorithmic) The employee credit union at State University is planning the allocation of funds1 r the coming year. The credit union makes four types of loans to i members. In addition, the credit union invests in risk-free securities o stabilize income. The various revenueproducing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate o
Bond X is noncallable and has 20 years to maturity, a 11% annual coupon, and a $1,000 par value. Your required return on Bond X is 11%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 10%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how
Why did william shlensky believe that the directors did not use good judgement?
in what area should hospitals operate? In all four areas? Discuss the basis for your decision.
Assigned Problem 1 NPC is considering either to invest in a project for a new product immediately or 1 year later. If NPC invests in the project today, there will be 75% chance of good market acceptance of the product and 25% chance of bad market acceptance of the product. If market reaction to the new product is good, a cash inflow of $500 million will be realized each year for the next 7 ye
Assigned Problem 3 SI Inc. is considering investing in a new product named Z90. There is a 50% chance that the product will be a success, which then generates $110,000 cash inflow each year for the next 5 years. There is a 50% chance that the product will fail, which then generates $25,000 cash inflow each year for the next 5 years. The project requires an initial investment of $250,000 Based
Assigned Problem 2 Garner-Wagner is considering investing in a project that requires $3,000,000. The project will generate a cash inflow of 500,000 per year for the next 5 years The cost of capital is 10%. What is the project's net present value? a. an investment of If Garner-Wagner goes ahead with this project today, it will obtain knowledge that will give rise to additional opportunities 5
2.. Funny Bear Company has 40% debt and 60% equity, as optimal capital structure. Their stock pric $60, last dividend distributed was $6.5, growth rate is expected as 7%, corporate tax rate is 20% flotation costs are 10%. They can borrow at 10% rate up to $15 million, above which interest rate rise 12%. Their expected net income for next year is $27 million, and 45% will be distributed as dividen
Assigned Problem 1 David Rose Inc. forecasts a capital budget of $500,000 next year with forecasted net income of $400,000. The company wants to maintaina target capital structure of 30 % debt and 70% equity. If the company follows the residual dividend policy, how much in dividends, if any, will it pay? Assigned Problem 2 The following data apply to Elizabeth's Electrical Equipment: All
A bond has a $1,000 par value, 10 years to maturity, and a 8% annual coupon and sells for $980. What is its yield to maturity (YTM)? Round your answer to two decimal places. % Assume that the yield to maturity remains constant for the next 5 years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. INTEREST
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 8% annual coupon. Bond L matures in 10 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturity and that 10 more payments are to be made on Bond L. What will the value of the Bond L be if the going interest rate is 6%? Round your answer to the near
Question 20 5 pts Ashley turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 8.10 % per year throughout her lifetime. She plans to retire 35 years from today when she turns 65, and she expects to live for 30 years after retirement, to age 9
Question 19 5 pts Consider a 30-year, $115,000 fixed-rate mortgage with a nominal annual rate of 4.85 percent. All payments are made at the end of each month. What is the remaining balance on the mortgage after 5 years? Your answer should be between 98,478 and 112,670, rounded to 2 decimal places, with no special characters. e
Question 18 5 pts An investment promises the following cash flow stream: $1,000 at Time 0, $2,000 at the end of Year 1 (or at t 1); $3,000 at the end of Year 2; and $5,000 at the end of Year 3.At a discount rate of 7.1 %, what is the present value of the cash flow stream? Your answer should be between 8343.00 and 11,000.00, rounded to 2 decimal places, with no special characters.
Question 17 5 pts Master Card and other credit card issuers must print the nominal annual rate (APR) on their monthly statements. If the APR is stated as 23.65% , but interest is compounded monthly,what is the card's effective annual rate (EFF% )? Your answer should be between 16.82 and 29.74, rounded to 2 decimal places, with no special characters.
Question 16 5 pts What's the present value of $11,500 discounted back 5 years if the appropriate interest rate is 4.9%, compounded semiannually? Your answer should be between 8032.00 and 9554.00, rounded to 2 decimal places with no special characters.
Question 15 5 pts You are offered a chance to buy an asset for $4,500 that is expected to produce cash flows of $750 at the end of Year 1, $1,000 at the end of Year 2, $850 at the end of Year 3, and $3,850at the end of Year 4. What rate of return would you earn if you bought this asset? Your answer should be between 5.08 and 22.48, rounded to 2 decimal places, with no special characters.
Question How do you find whether a stock is undervalued or overvalued? Give one example and explain. Discuss the difference of fundamental analysis vs. technical analysis.
Question We have two investment projects A&B. Both projects cost $250, and we require a 15% return of the two investments. Year A B 1 $100 $100 2 $100 $200 3 $100 0 4 $100 0 a) Based on the payback period rule, which project would you pick? Explain. b) Based on the NPV rule, which project would you pick? Explain. c) Do a) and b) give you the same conclusion? If not, why? Please elaborate.
Question 14 5 pts Chelsea is buying her first condo for $200,000, and will make a $15,000 down payment. She has arranged to finance the remainder with a 30-year mortgage at a 5.85% nominal interest rate. This amortized loan has monthly payments, with the first payment due in one month. What will her monthly payments be? Your answer should be between 526.00 and 1462.20, rounded to 2 decimal pl
Question 13 5 pts Bill paid $10,000 (at CFO) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $13,550 at the end of the 5th year. What is the expected rate of return on this investment? Your answer should be between 8.12 and 21.96, rounded to 2 decimal places, with no special characters. e a
Question 1. A bank is offering 12% compounded quarterly. If you put $100 in an account, how much will you have at the end of one year? What is the effective annual rate? How much will you have at the end of two years? (3 marks) 2. The Constant Company has just paid a dividend of $0.30 per share. The divided grows at a steady rate of 8% per years. What will the dividend be in 5 years? (2marks) 3. W
Question 12 5 pts Jim sold a car and accepted a note promising cash flows of $1,000 at the end of Year 1, and $2,000 at the end of Years 2, 3, and 4 as his payment. What was the effective price he received for the car, assuming an interest rate of 9.50%? Your answer should be between 4,715.00 and 6,525.00, rounded to 2 decimal places with no special characters. e
Question 11 5 pts Your best friend just won the Florida lottery. She has the choice of $15,900,000 today or an annuity with payments of $1,450,000 for 20 years, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard any tax consequences. Your answer should be between 2.01 and 14.74, rounded to 2 decimal places, with no e a
Halifax Inc. is evaluating two financing options to raise $10 million for an expansion project. Halifax Inc. can borrow money from a bank and the interest rate will be 8%, or Halifax Inc. can issue one million common stocks for $10 per share. The company currently has 2.5 million common shares. Without the new financing, the projected income statement of Halifax Inc. is shown below. Determ
Question 10 5 pts Your uncle has $340,000 invested at 6.5 %, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, starting at the end of this year. He also wants to have $25,000 left to give you when he stops withdrawing funds from the account. For how many years can he make the $35,000 withdrawals and still have $25,000 left at the end? Your answer should be betw
Question 9 5 pts Andy has $500,000 and wants to retire. He expects to live for another 30 years and to earn 7.75% on his invested funds. How much could he withdraw at the end of each of the next 30 years and end up with zero in the account? Your answer should be between 34,960.00 and 57,550.00, rounded to 2 decimal places, with no special characters. e