Consider the cash flow diagram below of two alternatives using an interest rate of 8% and select the using the EUAC method. Alternative A Alternative B Initial Cost, $ -15,000 -20,000 Annual M&O, $/year -6,000 -9,000 Refurbishment cost, $ 0 2,000 Salvage Value, % of P 20 40 Estimated Life, years 4 12
Q: Crawford Steel Corp. buys inventory of 40,000 units annually. The purchase price per unit is $3.00…
A: Inventory Management: Inventory management tools like the economic order quantity, the reorder level…
Q: Problem 3 As a recent graduate you are considering opening a savings account. The account is…
A: Here, Required Amount at the end of 20 years is $250,000 Nominal Annual Interest Rate is 8% Time…
Q: A person try to buy an apartment five years from now , assuming that the first deposit was ( $ 3000…
A: Accumulated value after 5 years = 3000*(1+i)^4 + 3300*(1+i)^3 + 3600*(1+i)^2 + 3900*(1+i)^1 + 4200…
Q: ou have 3 accounts: Account A has a $100 balance and a $300 credit limit. Account B has a $100…
A: The debt to credit ratio is the percentage of Credits availed divided by the Credit Limit Available.…
Q: 3. A firm borrowed $1.8 million at 10% per year interest. If the firm repaid the loan in a one…
A: Amount of payment can be calculated as: = Amount borrowed * (1 + rate)^ periods
Q: he required return on assets will change, if O a. one of the firm's business lines is closed. O b.…
A: Return on assets is income earned on whole assets after doing payments to all and it indicates the…
Q: Goldie clothes are planning to expand their clothing business by opening a factory overseas. The…
A: After calculating all working in excel, the Net Present Value (NPV) is £4,35,640. NPV Calculation:…
Q: A certain college graduate borrows 7406 dollars to buy a car. The lender charges interest at an…
A: Continuously compounded interest rate refers to the interest rate that is calculated on the…
Q: Ritter Sports Industries has preferred stock outstanding with a par value of $100. The stock pays a…
A: To calculate the effective rate of return we will use below formula Effective rate of return =…
Q: There are many indicators that can be used to determine a community’s needs and resources. Which of…
A: The answer is option 4: Homeownership. Homeownership is not a community need and resource indicator.
Q: In 2000, an investment was opened with an initial deposit of $1800. The investment had grown to…
A: Future value of present amount With present value (P), annual compounded interest rate (i) and…
Q: What is the expected return on equity for a firm with a 14% expected return on assets that pays 9%…
A: Solution:- Return on equity means the percentage of return earned on equity shares to the total…
Q: Larry wants to make a decision on a six- year amortized loan for him to buy a new car. The value of…
A: It will be enough for Larry to agree on this contract, if the present value of monthly payment of…
Q: Bradford inc. has a coupon bond that has a 10% coupon rate. The bond has a par value of $1000 and is…
A: A bond is a debt instrument used to raise capital by a company or the government. It can be traded…
Q: Extract of statement of Income and Expenditure for the Financial Years Ended 31 August 2020 2020…
A: Net asset value per unit share (NAV per unit share) Net asset value is total assets less total…
Q: 2000, an investment was opened with an initial deposit of $1800. The investment had grown to…
A: Future value of money depends on the interest rate, period and compounding per period and interest…
Q: 12)) The price of $6050 face value commercial paper is $5900. If the annualized investment rate is…
A: Commercial paper is a form of uninsured debt security issued by firms to support payrolls, accounts…
Q: An insurance company must make payments to a customer of £10 million in one year and £4 million in…
A: Bonds are the long-term financing measures to create debt. Interest (coupon) is paid periodically on…
Q: 6) Banco Bradesco S.A., announced yesterday that its 1th quarter earnings will be 2.9% higher than…
A: Abnormal returns are the returns when usually a company has large profits or losses generated from…
Q: Art purchase a house and lot worth ₱1,410,000, he made a down payment of ₱150, 000 and the remaining…
A: A home loan taken from a bank or a financial institution is termed as mortgage. The home and the…
Q: If the municipal bond rate is 6% and the corporate bond rate is 9%, what is the marginal tax rate,…
A: At indifference point after tax return on both the bond will be equal. Our equation will be as…
Q: Your family has a good working vegetable stand and wants to expand into selling from a truck, which…
A: To maintain the smooth operations of the company has to maintain a minimum inventory level. This…
Q: You can buy a piece of land today that you except will be worth $15000 in 9 years. Assuming your…
A: To calculate the value of property today we will use present value formula as follows: Present…
Q: Merrill Corp. has the following information available about a potential capital investment: Initial…
A: NPV means PV of net benefits which arises from the project during the life of the project. It is…
Q: Allergan Industries' stock is currently selling for $93 and is expected to pay a dividend of D1 =…
A: Current stock price (P0) = $93 Stock price at the end of year 4 (P4) = ? Growth rate (g) = ? Beta…
Q: In 1999, the euro was trading at $0.82 per euro. If the euro is now trading at $0.99 per euro, what…
A: To calculate the percentage change in euro's value we will use following formula Percentage change…
Q: FINANCIAL STATEMENT ANALYSIS AND RATIO ANALYSIS The following are the balance sheet and income…
A: Treasury ratios are created using financial statement figures to provide meaningful information…
Q: Suppose that Charles and Nancy are saving to buy a house. They have $20,000 in the bank, but know…
A: The concept of the time value of money states that the same amount of money has more value today…
Q: 12 You will bid to supply 3 jets per year for each of the next three years to the Navy. To get set…
A: We have to bid for 3 Jets per year for next 3 year to the Navy - 3*3 = 9 Jets in total $60 Million…
Q: MM Proposition II states that: I) the expected return on equity is positively related to leverage;…
A: MM has given two basic proposition one is related to value of firm and second is about the cost of…
Q: An engineering graduate received a job offer with a promise of a 4.75 percent annual raise in her…
A: This is the case of growing annuity in which periodic amounts are deposited at the end of each year.…
Q: Cálčulăté the capital recovery for the following cash flow. Assume i= 8% per year.
A: Capital recovery is annual amount that is obtained after paying for all cost and salvage value and…
Q: 24) In 1999, the euro was trading at $0.84 per euro. If the euro is now trading at $0.99 per euro,…
A: The euro's international role is principally backed by a deeper and more comprehensive EMU,…
Q: Which of the following is true? A.Forward contract buyers and sellers do not know who the…
A: Forward and futures contracts are derivatives agreements in which two parties associate to acquire…
Q: ABC has a return of 400,000 which is 2% more than its required return. If the cost of capital is…
A: Shareholder Equity: It can be described as the residual claim of the owners of the company after…
Q: Select the appropriate term to complete the sentences. A offers investors the opportunity to pool…
A: Mutual fund: A mutual fund is a pool of money from several individuals to invest in securities such…
Q: Various types of budgets facilitate understanding about the big picture of a business. There are…
A: Budget A budget is the estimate of incomes and expenses over a specified period. A budget helps in…
Q: KCCO, Inc., has current assets of $5,300, net fixed assets of $24,900, current liabilities of…
A: Shareholders/ Owner’s equity: The shareholders are the owners of the company and the shareholders…
Q: Discuss the MODIGLIANI AND MILLER (MM) propositions I and II in a no-tax world. Then, discuss MM…
A: Modigliani and Miller Theorem was proposed by F. Modigliani and M. Miller in 1958, while both of…
Q: Mester Corporation has provided the following Information concerning a capital budgeting project:…
A: Answer - Working Note : Depreciation expense = (Original cost – Salvage value) ÷ Useful life=…
Q: Question 2 The management of a power generation company in Zambia is planning to invest K100m for…
A: Investment means engaging your funds to generate more income for the future. Basically, investors…
Q: o buy equipment ; current price of it is ( $ 50,000 ) . So , he requested the help of a bank , the…
A: A bank costs a borrower an interest rate that is a percent of the principle, or the amount…
Q: Financial markets are important because A. It gives investors equal footing with debtors B. Capital…
A: The answer is option A. Financial markets are important because it gives investors equal footing…
Q: 17) What is the total risk (measured by standard deviation) of a two-asset portfolio made up of:…
A: Solution:- Total risk is measured by standard deviation of a portfolio. It means that how much will…
Q: ) Reported annual total returns (%) of Vanguard FTSE Emerging Markets Index Fund ETF Shares for the…
A: To Find: Average growth rate which takes effect of compounding is 1.59%
Q: Dollery established that Franchesco: plans to retire from her job in 20 years, after which this…
A: Data given: Retirement time=20 years Primary source of income will be Portfolio after retirement.…
Q: I Current ratio li. Times interest earned jli. Inventory turnover
A: Current Ratio: It is a measure of a firm's liquidity and shows the firm's ability to repay its…
Q: equired: Calculate the project's net Without making any calcul
A: NPV = Present value of cashinflows - Present value of cashoutflows.
Q: (b) Following particulars are available about a new automatic machine of the surgery department in a…
A: Annual Worth: It is the same uniform yearly worth of all assessed receipts and distributions…
Q: Provide an evaluation of the two proposed projects whose cash flow forecasts are found below:…
A: Capital Budgeting is the process of assessing long-term decisions made by management in order to…
Step by step
Solved in 2 steps
- The cash flows for four mutually exclusive alternatives are provided in the table below. If the useful life is 10 years for each alternative, find the best alternative using incremental rate of return analysis. MARR = 10% PQRS Initial Cost 19,000 16,000 11,000 8,500 EUAB 3,500 3,100 2,200 1,350 A. Alt. S B. Alt. P C. Alt. Q D. Alt. RFor the cash flows shown, use an annual worth comparison and an interest rate of 8% per year and detemine which service alternative should be selected. B Initial cost, $ 300000 680000 Annual cost, S/year S0000 30000 Annual cost started at year 4, S/year 15000 Extra cost every 6 years, $ 40000 Salvage value, $ 50000 150000 Life, Years 8. AW of alternative A is: AW of alternative B is: Which alternative will be selected?For the cash flows given below, find the ERR and evaluate the project when the external reinvestment rate is ε = 10% and MARR = 8%. EOY 0 1 2 234 5 Cash Flow -$10,000 -$2,000 $2,500 $4,000 $4,000 $4,000
- A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912Based on the following, obtain the Incremental Cash Flow and determine the NPV (12% discount) for the project: \begin{tabular}{|l|r|r|r|r|r|r|} \hline & \multicolumn{6}{|c|}{ Year } \\ \hline & & 1 & 2 & 3 & 4 & 5 \\ \hline Investment i Show Transcribed Text $403.93 $280.28 $356.63 $179.41gnment (II) Saved Fox Co. has identified an investment project with the following cash flows. Year Cash Flow $1,290 1,240 1,590 2. 3 1,950 a. If the discount rate is 9 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value at 9 percent b. Present value at 17 percent C. Present value at 23 percent re to search
- The cash flows for two mutually exclusive alternatives are as follow: A B - $500 - $600 -200 -300 500 150 400 300 300 450 Year 0 1 2 3 4 Each alternative has a 4-year useful life and no salvage value. The MARR is 12%. Which alternative should be selected based on: (a) Payback period (b) Benefit-cost ratio analysis (c) Rate of return analysisSolo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0. s29,200 11.400 14,100 16,000 13,100 2. 3. 4. 9,600 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate colculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % a. Discounting approach MIRR b. Reinvestment approach MIRR % C. Combination approach MIRRSuppose you are offered a project with the following cash flows: Year Cash Flows 0 1 2 3 4 $8,800 -4,800 -3,500 -2,600 -1,400 a. What is the IRR of this offer? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % O Accept O Reject ☆ b. If the appropriate discount rate is 13 percent, should you accept this offer? c. If the appropriate discount rate is 25 percent, should you accept this offer?
- The incremental cash flow present worth (PW) equation associated with two alternatives A and B is: 0 = -53,000+ 21,000(P/A, Ai*B-A,5) + 80000(P/F, Ai*B-A,5) Please provide the answers taking sign conventions into consideration. Determine the following: a) The first cost for B b) The M&O for A c) The salvage value of B Process Alternative A Alternative B First Cost, $ -30,000 ? M&O, $/Year ? -11,000 Salvage Value, $ 4,000 ? Life, Years 5 5Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 -24,063 -24,063 1 10,320 12,063 2 10,900 9,360 3 10,800 10,400 Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent (take 0%, 5%, 10%, 15%, 20%, 25%). Calculate the IRR of the projects. What is the relationship between NPV and IRR for your values? What is the crossover rate for these two projects and what it indicates for your values? Note - answer all the parts of the question.Doak Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 -15,300 1 6,400 2 7,600 3 7,200 4 6,000 5 -3,400 The company uses an interest rate of 9 percent on all its projects. Calculate the MIRR of the project using all three methods. Discounting approach ____________% Reinvestment approach ___________% Combination approach ____________%