A with a total investment value of Rp. 500,000,000,- The ect is 5 years old. Based on the calculation the total present value of Rp. 56,000,000, B with a total investment value of Rp. 600,000,000, The t is 5 vears old Based on the caloulation of the present is (ears res
Q: 4. Consider that you buy a share of a stock that currently sells for $50 and pays an annual dividend…
A: Current selling price per share is $50.00 Annual dividend per share is $2.00 One year from now…
Q: Problem 19-05 Three investments cost $6,000 each and have the following cash flows. Rank them on…
A: Payback period is the amount of time required to recover initial investment. Payback period =Initial…
Q: 1. If money is worth 5% compounded quarterly, how much must Julea save every end of three months to…
A: Here we will use the concept of time value of money. As per the concept of time value of money it is…
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…
A: Here, Increase in Revenue is $120 million Expenses is $80 million per year Tax Rate is 30%…
Q: 2. Consider stocks A and B with the following characteristics: E(RA)=1.42%; E(Rg)=1.92%;…
A: Risk and return are the two important components of the investment. Return means earn additionally…
Q: Why was the salvage value used in calculating the depreciation expense?
A: This method also called diminishing balance method or declining balance method where the…
Q: insurance is relevant to the public an
A: Insurance is an agreement between two parties in which the insurer should pay money against which…
Q: Suppose thát we can describe the world using two states and that two assets are available, asset K…
A: State Future Price of Asset K Future price of Asset L 1 $55 $60 2 $45 $30…
Q: Consider a non-paying dividend stock sells for 150. George wants to sell his stock in one year for a…
A: Call option gives the buyer of call a right to buy the stock at a pre-determined price Put option…
Q: 29. A. $ You can earn a market rate of 6%. A. What is the monthly payment amount necessary to save…
A: Time value of money (TVM) is used to measure the value of money at different point of time in the…
Q: Which of the following statements is false? A. The sovereign credit rating is a risk of a…
A: A bond is an fixed market instrument that carries less risk than equity. To check creditworthiness…
Q: In the accompanying diagram, what is the value of K on the left-hand cash-flow diagram that is…
A: Present value of future amount With interest or discount rate (i), period (n) and future value (FV),…
Q: (1) What is the present value of the money being borrowed? (2) Convert your Present Value to Annual…
A: Effective annual rate (EAR) refers to a real interest rate which an investor is expect from his…
Q: Exercise 4. Consider a mean-variance optimizer that wants to invest in bonds for two periods. In…
A: Given are the details, Annual yield bond = y2 for 2 years Annual yield bond = r1 for 2 year, Annual…
Q: Annie bought a house in Bozeman in 1990 for $100,000 and sold it in 2010 for $300,000. The CPI in…
A: The after-tax real return the percentage value that shows the net return after taxes payment which…
Q: A factory has decided to purchase some new equipment for P650, 000. The equipment will be kept for…
A: Allocating the cost of assets equally throughout the life of the asset is known as the straight-line…
Q: 2. The following table presents the logarithmic returns of stocks A,B and C over three years: Month…
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: Jean deposited P1,000, P1,500 and P2,000 at the end of the 2nd year, 3rd year and 4th year,…
A: Year Deposit 2 1000 3 1500 4 2000 Interest rate = 0.06
Q: Question 3- Taxable Equivalent Yield Jack & Jill are a young married couple residing in Connecticut.…
A: The return on a taxable bond which is equivalent to the return on a tax-free bond is known as…
Q: Define the following: Bond: Par Value: Maturity:
A: Given , To define the following terms:- Bond, Par value and Maturity.
Q: Auditing Sales/Revenue Transactions When an auditor needs to obtain an understanding of the overall…
A: Management is the management of an institution, whether it be a corporation, a semi, or a federal…
Q: 8. Assuming a discount rate of 7%, what is the net present value of buying the new machine? A:…
A: Net present value (NPV) of an alternative/project refers to the variance between the initial…
Q: Value of the house 400,000. You are using a 30-year mortgage. Also, you are putting down 20%. You…
A: Mortgage is a value which is borrowed from external sources like banks and this amount is repaid…
Q: Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of $1.30 per share at the…
A: Last dividend (D0) = $1.30 D1 = 1.18 * $1.30 = $1.534 D2 = (1.18)^2 * $1.30 = $1.81012 D3 = (1.18)^3…
Q: A. Calculate the operating income percentage for each of the courses. Round your percentages to one…
A: Operating Income: It refers to the income generated from the normal business operations of the…
Q: The volatility of a dividend-paying stock whose price is $88, is 25%. The continuous compounded…
A: Stock Price S $ 88.00 Strike Price K $…
Q: Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Determine the finance charge, new balance, and minimum payment required for each of the next two…
A: Finance charges refers to those costs or extra amount which is paid by the borrower to the lender on…
Q: 9. Calculating Project OCF H. Cochran, Inc., is considering a new three-year expansion project that…
A: Solution : Operating Cash Flow ( OCF) means that Cash flow which was generated by entity through his…
Q: Consider a non-paying dividend stock sells for 150. George wants to sell his stock in one year for a…
A: Hedging is an risk management technique in which an investors manages ot removes his potential risk…
Q: Which of the following statements accurately describes the relationship between earnings and…
A: Growth rate in earnings and dividend = ROE*Retention ratio or ROE*(1-Payout ratio) Growth rate…
Q: download financial statements for omantel company for 2021 and posted then calculate Earnings per…
A: The full name is Oman Tourism Development Company (OMRAN), which was established in 2005 by the…
Q: 5a. An elective project is currently under review. It requires an initial investment of $116,000 for…
A: The rate of return: The rate of return or the internal rate of return (IRR) is the rate at which the…
Q: Given the following information,what is the cost of equity capital for JJ&Co Pty Ltd? JJ&Co…
A: Risk free rate = 2% Market return = 7.50% Correlation between JJ&Co and market = 0.50 Market…
Q: 3. Complete the decision rule for the IRR method. If then the project is economically justified.
A: To select the project based on IRR, IRR should be greater than required rate of return. If IRR is…
Q: Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this…
A: To Find: Debt ratio Average collection period Fixed asset turnover Return on equity
Q: 30. The internal rate of return is the simple (noncompounded) interest rate that equates the present…
A: The internal rate of return (IRR) is the rate at which initial investment equals the present value…
Q: A contractor imported a bulldozer for his job, paying Ph 250000 to the manufacturer. Freight and…
A: Depreciation is an accounting term for a method of allocating a tangible or physical asset's cost…
Q: Q-1: Calculate the market value of Bonds B, C, and D in the Table below:
A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…
Q: What is the bond equivalent yield on a $1 million T-bill that currently sells at 91.320 percent of…
A: Bond Equivalent Yield refers to the annual percentage return earned by an investor on the prevailing…
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…
A: NPV and IRR NPV and IRR are capital budgeting tools to decide on whether the capital project should…
Q: Landon Wallin is an auto mechanic who wishes to start his own business. He will need $4900 to…
A: Monthly finance charge is defined as any charge that comes into existence due to use of credit card.…
Q: An elective project is currently under review. It requires an initial investment of $116,000 for…
A: IRR is the Internal rate of return. It is that rate at which the NPV of a project is zero.
Q: Project Evaluation Kolby's Korndogs is looking at a new sausage systém vith an installed cost of…
A: The net present value is the difference between the present value of cash flow and initial…
Q: A parcel of land can be leased for a period of 10 years. Initial development costs for clearing,…
A: The annual revenue grow by geometric sequence and present value of that can be found out from that…
Q: If you save P1,000 a month for the next 10 ears, at 8% per year, compounded monthly. Dw much money…
A: We will use the concept of time value of money here. The concept states that worth of money changes…
Q: 9. A $12,000 car loan at 2.5% for 4 years has a monthly payment of $2E for 3 years has a monthly…
A: Loan payments are paid by the monthly payment that carry the payment for interest and payment for…
Q: Why do firms hedge their risk and what determines the choice of contract for hedging?
A: Hedging is a risk management approach that involves acquiring an opposing position in a comparable…
Q: A contract has been signed to lease a building at P50, 000 per year with an annual increase of P1,…
A: First year lease (L1) = P 50000 L2 = P 51000 L3 = P 52000 L4 = P 53000 L5 = P 54000 r = 7%
Q: Credit spreads tend to widen as the credit cycle improves. Select one: True False
A: Credit spreads tends to narrow when the credit cycle improves and they widen when the credit cycle…
Step by step
Solved in 2 steps
- Using the below informtion answer: 5.1 Payback Period of Project Tan (expressed in years, months and days). 5.2 Net Present Value of Project Tan.5.3 Accounting Rate of Return on average investment of Project Tan (expressed to two decimal places). INFORMATIONThe management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each ofwhich requires an initial investment of R2 500 000. The following information is presented to you: PROJECT COS PROJECT TANNet Profit Net ProfitYear R1 130 000 80 0002 130 000 180 0003 130 000 120 0004 130 000 220 0005 130 000 50 000A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculatedusing the straight-line method.As the financial manager of Soloi Ltd, you are required to analyse two proposed capital investments, namely Projects 02AD and 02ZT. Each has a cost of R100 000, and the cost of capital for each project is 12%. Depreciation on each project is estimated at R25 000 per year. The projects' expected net profit (loss) are as follows: Year 1 2 3 4 Project 02AD R40 000 R5 000 R5 000 (R15 000) Project 02ZT R10 000 R10 000 R10 000 R10 000 Required: 1. Calculate the payback period for each project. 2. Calculate the net present value for each project. 3. Determine which project should be chosen (Based on 2 above). 4. Calculate the internal rate of return for project 02ZT.XYZ is evaluating a project that would last for 3 years. The project's cost of capital is 15.60 percent, its NPV is $43,200.00 and the expected cash flows are presented in the table. What is X? Years from today 0 1 2 3 Expected Cash Flow (in $) -55,800 71,000 -15,900 X O An amount less than $43,200.00 or an amount greater than $82,666.00 O An amount equal to or greater than $70,205.00 but less than $82,666.00 O An amount equal to or greater than $60,505.00 but less than $70,205.00 O An amount equal to or greater than $53,257.00 but less than $60,505.00 O An amount equal to or greater than $43,200,00 but less than $53,257.00 M
- The following table presents information on a potential project currently being evaluated by XYZ. Which assertion about statement 1 and statement 2 is true? Cost of capital Expected cash flows (number of years from today) 0 1 2 3 4 -$82,000.00 $38,000.00 $20,000.00 $31,000.00 $7,000.00 12.13% Statement 1: XYZ would accept the project based on the project's net present value and the NPV rule. Statement 2: XYZ would accept the project based on the project's payback period and the payback rule if the payback threshold is 3.75 years Statement 1 is true and statement 2 is true Statement 1 is true and statement 2 is false Statement 1 is false and statement 2 is true Statement 1 is false and statement 2 is false3:Consider the following financial data for a project. 2- Find the (ROR) for the project.. We jus المصرر AP 1 = 10) b- If the the expense will increase by 10%, find the annual revenue that will make (POR-10%) Initial investment 18 000 CU Annual revenue 5000 CU Annual expense 3000 CU Salvage value 4500 CU Project life 12 YEARSA project is estimated to cost P110,000, last 8 years and have a P15,000 salvagevalue. The annual gross income is expected to average P24,000 and annualexpenses, excluding depreciation, will total P6,000. If capital is earning 10% beforeincome taxes, determine if this is a desirable investment using A. Present Worth Method :B. Future Worth MethodC. Payback Period in years
- (a) Determine the initial capital of Project A and Project B. (b) If Project A and Project B are mutually exclusive, calculate the Net Present Value (NPV) of Project A and Project B given that the cost of capital is 5%. Based on the NPV method, explain with reason which project should be invested. (c) Axis Sdn. Bhd.’s current investment policy is to accept only investments that are recoverable within 3 years.Calculate the discounted payback period of Project A and Project B if the cost of capital is 5%. Based on the calculated discounted payback period of Project A and Project B, advise the company on which new project to select if they are mutually exclusive. (d) The discounted payback rule could reject good long-term projects and can easily mis-rank competing projects. Based on the discounted payback calculation, give THREE (3) reasons and explain why this method can lead to nonsensical decisions. (e) If the cost of capital increases to 15%, calculate the NPV of Project A and…1. Determine which of the two (2) investment projecta your supervisor ahould choose, given a diacount rate of 10% from J P Morgan Chase bank. The first project generates a profit of USS 100,000 in four (4) years, while the second, a profit of US$ 75,000 in six yeara. NPV 1 = 100000 (1/1.1^4 + 1/1.1^3 + 1/1.1^2+ 1/1.1) = $316986.55 NPV 2 = 75000 (1+/1.1^6 + 1/1.1^5 + 1/1.1^4 + 1/1.1^3 + 1/1.1^2 + 1/1.1) =$326644.55 The second investment 11 What ia the discount rate or proxy of the diacount rate that ahould be uaed? 1.2 Determine the optimal inveatment project at the given diacount rate? 1.3 Suppose the diacount rate at Bank of America, ia 7.5%, which project ahould be chozen.Calculate the:Net Present Value (NPV) of the investment and comment on the viability of the investment project. The annual incremental profits/ (losses) relating to the investment are estimated as follows: Years CF’s (000) Year 0 -175,000 Year 1 K11,000 Year 2 K3,000 Year 3 K34,000 Year 4 K47,000 Year 5 K8,000 Investment at the start of the project would be K175, 000,000.the investment sum assuming nil disposal value after five years, would be written off using the equal instalment method. The depreciation has been included in the profit estimates above, which should be assumed to arise at each year end. Assume the cost of Capital is 12% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 D.f 1.00 0.893 0.797 0.712 0.636 0.567
- Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year O 1 2 Cash Flow -$38,000,000 57,500,000 -13,000,000 a. If the company requires a return of 11 percent on its investments, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Compute the IRRs for this project. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Enter the larger IRR in the first answer box and the smaller IRR in the second answer box. If you can only calculate one IRR, enter it in both boxes to receive partial credit. A negative answer should have a minus sign.) a. NPV b. Larger IRR Smaller IRR 3,250,950.00 23.65 % %Required: i.Determine the initial capital of Project A and Project B. If Project A and Project B are mutually exclusive, calculate the Net Present Value (NPV) of Project A and Project B given that the cost of capital is 5%.Based on the NPV method, explain with reason which project should be invested. ii. Axis Sdn. Bhd.’s current investment policy is to accept only investments that are recoverable within 3 years.Calculate the discounted payback period of Project A and Project B if the cost of capital is5%. Based on the calculated discounted payback period of Project A and Project B, advise the company on which new project to select if they are mutually exclusive.A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross income is expected to average P40k & annual expenses is P6T. If capital is earning 12% determine if this a desirable investment using rate of return. What is your computed ROR? Select one: a. 20.07% b. 21.07% c. 17.17% d. 23.17%