Q: Which of the following involves a financial outflow from the U.S. economy? a. returns paid on U.S.…
A: In the economy there are outflows and inflows to economy because investors may invest outside and…
Q: Show what you typed into the TVM solver plus any additional work!
A: Information Provided: Future value = $200,000 Monthly savings = $150 APR = 2.75%
Q: Find the future value, using the future value formula and a calculator. (Round your answer to the…
A: Future value = Present Value×[1+Periodic interest rate]^n n = Number of periods = 30 Periodic…
Q: Consider sharing of income risk as a gain from marriage. Assume that individual incomes Y are drawn…
A: Risk aversion: The investor who favors capital preservation above the possibility of earning a…
Q: s a member of the FOMC, the U.S. economy is entering a recession with a high rate of inflation.…
A: In this question , as a member of the FOMC , need to write directives to the committee about the…
Q: How did you find the taxable income in part a
A: Taxable income is the income that is subjected to tax. It is the amount of sales as reduced by cost…
Q: e Imhoff Company's balance sheet shows the following labilities and net worth: 10,000 bonds (Issued…
A: Terminal value is the value after which there is constant growth of cash flow happens based the cost…
Q: The financial statements for Castile Products, Incorporated, are given below: Castile Products,…
A: The question is related to Ratio Analysis. The Working Capital is the excess of Current Assets over…
Q: Konawalski's Kustom Erdapfel Chips, Inc., is the maker of gourmet German-style potato chips. The…
A: Stock Price The price at which a share of stock is currently trading on the market is referred to as…
Q: Revenues - Manufacturing Expenses - Marketing Expenses - Depreciation =EBIT - Taxes (20%) =Unlevered…
A: Capital Budgeting is a technique to understand if a project is adding value to the organization or…
Q: Suppose the current price of the bond is $95, the YTM is 4%, and the duration of the bond is 9. If…
A: Initial price of bond is $95 YTM is 4% Duration of bond is 9 YTM decrease from 4% to 3.9% To Find:…
Q: The Herfindahl concentration index for a country is highly correlated with the weight its largest…
A: Herfindahl–Hirschman Index or HHI is referred as an index, which is accepted measure that…
Q: A joint former cost $55,000 to purchase and $105,000 to install seven years ago. The market value…
A: It is given that, Purchase value - $ 55,000 Installation charges - $105,000 Market value - $34000…
Q: What is the most we should pay for a share if preferred srock that pays an annual dividend of $1.43…
A: Solution:- Preferred stocks are those shares which pay a regular dividend to the shareholders, but…
Q: Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has…
A: When a project is presented, a preliminary analysis must be performed to assess whether or not it…
Q: If Annie buys the bond today at its $1,000 par value and holds it for exactly 3 years, at which time…
A: Given, The face value of bond is $1000 Interest rate is 8%
Q: What is the average daily balance for this account? $ What is the finance charge for the month of…
A: Many credit card companies use the average daily balance method to compute the finance charges on…
Q: You are a real estate agent thinking of placing a sign advertising your services at a local bus…
A: Payback period is reflective of the period within which the total cost and investment incurred by…
Q: 10. When all investors correctly interpret and u- information, as well as information that can from…
A: There are different types of investors depending on the type of investors in the market and their…
Q: Matteo Company was expected to pay a $4.00 dividend in the coming year, dividends were expected to…
A: The price of stock can be calculated as the present value of dividends based on required of stock…
Q: Why is depreciation and interest expense in the excel 300,000 if it states its 3 million?
A: 3 million = 3,000,000
Q: ments. The first replacement payment is due in three years and the second payment is due in termine…
A: The effective interest is the interest after considering the impact of compounding on interest and…
Q: when is a good time to invest in straight bon
A: Bond are type of debt instruments that are used to raise the money from market and only interest is…
Q: a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a…
A: Information Provided: Stock beta = 1.35 Expected return = 16% Risk-free asset return = 4.8%…
Q: A company is planning to buy a new truck that will cost P700,000 and will be depreciated on a…
A: Here, Cost of New Truck is P700,000 Book Value of Old Truck is P450,000 Sale Price of Old Truck…
Q: Spless Corporation has two major business segments-Apparel and Accessories. Data appear below. Sales…
A: Net operating income Net operating income is resulted when all expenses and costs are deducted from…
Q: What is the present value of $30,000 you will receive 7 years in the future, ass
A: The present value is equivalent value of money to be received today that will be equal to money to…
Q: Purcell Farms Inc. has the following data, and it follows the residual dividend model. Currently, it…
A: Residual dividend policy states that internal accruals (net income) will be first used to finance…
Q: Huxley lost $400 in the stock market. According to behavioral economics research, how much of a gain…
A: According to behavioral economics the Psychology of investment is very important in the investment…
Q: Calculate the present value PV (in dollars) of an investment that will be worth $1,000 at the stated…
A: Future value after 12 years (FV) = $1,000 Quarterly period (p) = 48 (i.e. 12 years * 4) Quarterly…
Q: 1. Given following information: Paula previous balance Purchase clothing and dining Leisure and…
A: Credit cards are paid on monthly basis and interest and finance charges are calculated based on the…
Q: Corporation will pay a dividend of $1.75 per share at this year's end and a dividend of $2.25 per…
A: The dividend discount model is a method of finding out the current price of a company’s share. It is…
Q: An investment of $4431.57 earns interest at 6.2% per annum compounded annually for 2 years. At that…
A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount initially…
Q: A piece of production equipment is purchased for an initial cost of $1,200,000. It has a life of 10…
A: Production cost: The production cost is the entire amount spent on the materials, labor, and other…
Q: Explain and show how you could profit by investing in individual stocks in Malaysian stock market.
A: In this question , we will explained how to earn profit by investing in individual stocks in…
Q: will generate $1.82 million per year (starting at the end of the first year) in perpetuity.…
A: Net present value is the difference between the present value of cash flow and initial investment…
Q: Can you re-check your work?
A: Information Provided: Semiannual payments = $4016.00 Years = 23 Interest rate = 14%
Q: What amount of money would have to be invested at 4.25% to grow to $15000 after 150 days?
A: Future value (FV) = $15000 Interest rate (r) = 0.0425 or 4.25% Number of days (n) = 150 days Lets…
Q: A generous donor has offered to fund a scholarship at UTP worth RM120,000 per year beginning in year…
A: Perpetuity will be reflective of a stream of cash flows which will be continuing forever. The…
Q: CMS Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par)…
A: Bonds are debt instruments issued by a company. The company that issues the bond pays a periodic…
Q: You have been given the following return information for a mutual fund, the market index, and the…
A: Sharpe ratio is the ratio, which was developed by William F. Sharpe that are used to helps the…
Q: The following table lists several corporate bonds issued during a particular quarter. Company AT&T…
A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount initially…
Q: Nicolas has purchased a streaming audio service for $8.00 per month. As he listens to more songs in…
A: Data given: Monthly fees= $8.00
Q: 'inding the W Given the following information for Eve Power Co., find the WACC. Assume the company's…
A: The WACC weighted average cost of capital is the weighted cost of debt , weighted cost of equity and…
Q: You just purchased a bond that matures in 15 years. The bond has a face value of $1,000 and an 8%…
A: The formula to calculate current yield is given belowCurrent yield = Annual Coupon/Price of the…
Q: calculate the M1 money multiplier (using the U.S. laws and regulations) but forgets to tell you…
A: Formula for M1 multiplier = [1+ (C/D) + (ER/D)]/ [(SD/D) + (STD/D)] Where C = Cash /currency in…
Q: At the end of every month you invest $100 into the stock market for the next 48 years. Assuming the…
A: Monthly investment (m) = $100 Monthly rate of return (r) = 0.00666666666666667 (i.e. 0.08 / 12)…
Q: To finance the development of a new product, a company borrowed $36.000 at 9% compounded monthly. If…
A: The act of repaying a loan taken from a lender, combined with the relevant interest amount, is known…
Q: You have located a warehouse property to purchase at a price of $320,000. You plan to make a 20%…
A: Commercial mortgage loans are obtained by business entities for acquiring office buildings, malls,…
Q: d) What is the WACC of e) What would be the firm's value and overall cost of capital, value) debt in…
A: MM Proposition II with taxes: The MM Proposition I with taxes states that the value of the levered…
Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $22,000, whereas the gas-powered truck will cost $17,500. The cost of capital that applies to both investments is 12%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,290 per year, and those for the gas-powered truck will be $5,000 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and
Step by step
Solved in 3 steps with 2 images
- Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $23,000, whereas the gas-powered truck will cost $17,100. The cost of capital that applies to both investments is 11%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,500 per year, and those for the gas-powered truck will be $4,750 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck, and decide which to recommend. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places.Davis Industries must choose between a gas-powered and an electric-powered forklifttruck for moving materials in its factory. Since both forklifts perform the same function, the firmwill choose only one. (They are mutually exclusive investments.) The electric-powered truck willcost more, but it will be less expensive to operate; it will cost $22,000, whereas the gas-poweredtruck will cost $17,500. The cost of capital that applies to both investments is 12%. The life forboth types of truck is estimated to be 6 years, during which time the net cash flows for theelectric-powered truck will be $6,290 per year and those for the gas-powered truck will be$5,000 per year. Annual net cash flows include depreciation expenses. Calculate the NPV andIRR for each type of truck, and decide which to recommend.Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric- powered truck will cost more, but it will be less expensive to operate; it will cost 22,000, whereas the gas-powered truck will cost 17,500. The cost of capital that applies to both investments is 12 percent. The life for each type of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be 6,290 per year and those for the gas-powered truck will be 5,000 per year. Annual net cash flows include depreciation expenses. Required Calculate the NPV and IRR for each type of truck, and decide which to recommend.
- Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric- powered truck will cost more, but it will be less expensive to operate; it will cost 22,000, whereas the gas-powered truck will cost 17,500. The cost of capital that applies to both investments is 12 percent. The life for each type of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be 6,290 per year and those for the gas-powered truck will be 5,000 per year. Annual net cash flows include depreciation expenses. Required Calculate the NPV for each type of truck, and decide which to recommend.Marvin Industries must choose between an electric-powered and a coal-powered forklift machine for its factory. Because both machines perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered machine will cost more, but it will be less expensive to operate; it will cost $102,000, whereas the coal-powered machine will cost $69,500. The cost of capital that applies to both investments is 10%. The life for both types of machines is estimated to be 6 years, during which time the net cash flows for the electric-powered machine will be $26,150 per year, and those for the coal-powered machine will be $20,000 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of machine, and decide which to recommendBermuda Co. must choose between gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $110,000, whereas the gas powered truck will cost $40,000. The required rate of return that applies to both investments is 14 percent. The life for both types of truck is estimated be 12 years, during which time the net cash flows for the electric-powered truck will be $23,500 per year and those for gas-powered truck will be $10,000 per year. Calculate the NPV and IRR for each type of truck, and decide which to recommend.
- Isaac Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. The firm will choose only one because both forklifts perform the same function. (They are mutually exclusive investments.) The electric-powered truck will cost more but will be less expensive to operate; it will cost $22,000, whereas the gas-powered truck will cost $17,500. The cost of capital that applies to both investments is 18%. The life for both types of truck is estimated to be six years, during which time the net cash flows for the electric-powered truck will be $7,290 per year, and those for the gas-powered truck will be $6,000 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck and decide which to recommend. Compute the NPV for each truck. Compute the IRR for each truck. Compute the crossover rate. Compute the payback period for each truck. Compute the profitability index for each truck.Giangelo Corporation would like to venture in manufacturing a specialized tool that is required by a semi-conductor company. In order to accomplish this, it is considering two options that both require raising large amount of funds. First option (Project X) is the construction of a factory building and acquisition of machineries for an estimated cost of P30 million. The other alternative (Project Y) is the acquisition of an existing company that manufactures the same tool at a price of P50 million. In order to fund the project, the Company will have to apply for a loan from a bank and issue shares of stocks. The management contemplated a more leveraged approach by availing the 70% of the financial requirements through loan borrowing and the rest from the issuance of shares. The interest on bank loan is at 11% per annum while the issuance of shares will require return to stockholders at 8% per annum. The applicable income tax rate is 25%. Both of the projects will have estimated life of…Sweeney Manufacturing has a plant where the equipment is essentially worn out. The equipment must be replaced, and Sweeney is considering two competing investment alternatives. The first alternative would replace the worn-out equipment with traditional production equipment; the second alternative uses contemporary technology and has computer-aided design and manufacturing capabilities. The investment and after-tax operating cash flows for each alternative are as follows: Year TraditionalEquipment ContemporaryTechnology 0 $(990,250) $(3,998,000) 1 591,150 192,500 2 394,650 398,750 3 209,100 591,550 4 209,100 801,600 5 209,100 801,600 6 209,100 801,600 7 209,100 1,007,000 8 209,100 1,991,100 9 209,100 1,991,100 10 209,100 1,991,100 The company uses a discount rate of 18 percent for all of its investments. The company's cost of capital is 14 percent. The present value tables provided in Exhibit 19B.1 and…
- Trader Bubba Industries must choose between solar and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The solar truck will cost more but will be less expensive to operate; it will cost $70,000, whereas the electric-powered truck will cost $60,000. The life for both types of truck is estimated to be 8 years, during which time the net cash flows for the solar-powered truck will be $20,000 per year and those for the electric-powered truck will be $12,000 per year. Trader Bubba Industries’ assets are $400 million, financed through bank loans, bonds, preferred stocks, and common stocks. The amounts are as follows: Bank loans: $50 million borrowed at 6% Bonds: $200 million, paying 8% coupon with semi-annual payments, and maturity of 10 years. Trader Bubba sold its $1,000 par-value bonds for $1020 and had to incur $20 flotation cost per bond.…The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting, grinding, and packing plant. The two alternatives are (1) a conveyor system with a high initial cost but low annual operating costs and (2) several forklift trucks, which cost less but have considerably higher operating costs. The decision to construct the plant has already been made, and the choice here will have no effect on the overall revenues of the project. The cost of capital for the plant is 8%, and the projects’ expected net costs are listed in the following table: What is the IRR of each alternative? What is the present value of the costs of each alternative? Which method should be chosen?The Chihiro Co. is considering two investments to move materials and supplies around its factory: 1) a conveyor belt system; and 2) a fleet of forklift trucks. The initial costs of each approach today, and the future annual cash operating costs for each investment for the following five years (the estimated useful life of each investment, after which they will be worth nothing), are as follows (hint: all of these numbers represent costs, i.e., cash outlays): Assume the appropriate required rate of return to use in analyzing these cash flows = 10%. TIME 0 1 2 3 4 ANNUAL COST, CONVEYER $500,000 $120,000 $120,000 $120,000 $120,000 $20,000 ANNUAL COST, FORKLIFTS $200,000 $160,000 $160,000 $160,000 $160,000 $160,000 A) What is the IRR of each alternative? Hint: what are the signs of each of the cash flows? B) What is your recommendation for the best investment for the company? Why?
