wildhorse inc. plans to purchase equipment with a cost of 134000. The company expects annual net cash inflows from the equipment of 30000. The equipment has an estimated life of 8 years, no salvage life, and a reuired rate of return is 6%. The payback period for the equipment is closest to A. 1.0 year B. 1.5 year C. 8.0 year D. 4.5 Year
Q: A homeowner took out a 25-year fixed-rate mortgage of $85,000. The mortgage was taken out 10 years…
A: Mortgages are a type of loan that can be used to purchase or maintain a home, a plot of land, or any…
Q: a. If the appropriate discount rate is 15 percent and all cash flows are received at year's end,…
A: Current Price of the Share : The price what the particular companies share shall fetch in when…
Q: Which of the following items are included in calculating Firm Free Cash Flow? I. Cost of goods sold…
A: Cash flows refer to the payments that are made in or out of the business, it takes into account the…
Q: Rates of returns on annuities cannot be calculated with a formula. True False
A: Rate of return refers to the return earned by the investors over the investment ampunt which is…
Q: (a) What is the internal rate of return of this investment? (b) The hurdle rate is 12.5%. Should the…
A: The internal rate of return is an indicator of an investment's quality. It displays the rate of…
Q: Residual Yield ZC Price Last Maturity Last Chg 1M Chg 6M Last Chg 1M Chg 6M Change 1 month 2.326%…
A:
Q: The followings are the instructions for this case. Provide the excel file where the computations are…
A: To provide the answers to your questions, I'll first gather the required information from…
Q: The Indiana Company has had a great year financially and they are wanting to better understand the…
A: The free cash flow is the amount of free cash available that can be distributed to stakeholders…
Q: A boy is celebrating his 16th birthday and we lead 3000 on 17th 18th 19th and 20th birthday for his…
A:
Q: 12. Suppose Hunter Valley is deciding whether to purchase new accounting software. The payback for…
A: The payback period denotes the duration it takes for an investment to recover its initial…
Q: If a Canadian resident receives an inheritance of $1 million from a relative in the U.S. and then…
A: The objective of the question is to understand how the transactions of inheritance and purchase of…
Q: Procter & Gamble (PG) paid an annual dividend of $3.01 in 2021. You expect PG to increase its…
A: Price per share:The "price per share" refers to the monetary value assigned to an individual share…
Q: An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 11% yield…
A: Bonds are debt instruments issued by companies, entities, or governments to raise funds to meet…
Q: Required: Zeda Incorporated, a U.S. MNC, is considering making a fixed direct Investment In Denmark.…
A: Direct investment refers to a ownership which is helped by the investors, government, etc such as…
Q: Copper Corp. has an outstanding bond issue that is currently selling for $1,073.95. The yield to…
A: The current yield is a crucial metric for investors to assess the income potential of a bond…
Q: at Richardson manufacturing company, there are two factors that determine the cost of health care.…
A: Health care policy:Healthcare policy refers to the set of rules, regulations, and initiatives…
Q: A seven-year par value bond has a coupon rate of 9% (paid annually) and a modified duration of A. 7…
A: Modified duration is a financial metric used to measure the sensitivity of a bond's price to changes…
Q: Assume the following information: Spot rate of U.S. dollar Quoted Price AUD1.2500/USD 180-day…
A: The objective of the question is to calculate the rate of return for both US and Australian…
Q: Franklin Stewart arrived at the following tax information: Gross salary Interest earnings Eligible…
A: The concept here involves determining taxable income, which is a key component in calculating how…
Q: Hearne Company has a number of potential capital investments. Because these projects vary in nature,…
A: The technique used to calculate the net present value of cash inflows and outflows for each project…
Q: Which of the following phrases might be useful in writing the purpose statement for your formal…
A: The correct answers are:The report determinesThe research explainsThis report justifiesWe analyze…
Q: Why is it important to have a financial benchmark for short-term interest rates?
A: The objective of the question is to understand the importance of having a financial benchmark for…
Q: Bond P is a premium bond with a 9 percent coupon. Bond D is a 4 percent coupon bond currently…
A: Current yieldCurrent yield is a measure of the annual income generated by a bond relative to its…
Q: A Treasury bill with 109 days to maturity is quoted at 97.630. What are the bank discount yield, the…
A: Maturity period = 109 daysA treasury bill quoted at 97.630Face value = $100
Q: 61. For an option fee of $6,000, a seller provided an option to a buyer for 90 days to purchase the…
A: The objective of the question is to understand the consequences of a seller deciding not to proceed…
Q: What should be the value of a Bankers' Acceptance with a $100,000 face value and 79 days until…
A: Considering a $250,000 face value and 279 days until maturity, quoted on a discount basis yielding…
Q: nnuity purchased for $182,000 pays pounded semiannually? (Do not roum ber.) be years months
A:
Q: :20 An annuity purchased for $182,000 pays $4700 at the end of every quarter. How long will the…
A: The objective of the question is to find out how long the payments from an annuity will continue…
Q: Determine the monthly principal and interest payment for a 15 -year mortgage when the amount…
A: The objective of the question is to calculate the monthly principal and interest payment for a…
Q: A stock is expected to pay a dividend of $1.00 at the end of the year (I.e., D₁ $1.00), and it…
A: Dividend = $1Growth Rate = 10%Required Rate = 13%Expected Price after 4 years
Q: Prepare an amortization schedule for a five-year loan of $47,000. The interest rate is 7% per year,…
A: The loan amortization refers to the repayment of a loan using periodic payments. In this, the…
Q: 48. You presently have $60,000 in an account that earns interest at 6.0% compounded monthly. You…
A: The future value is an estimate of how much money you will have in the future from investments or…
Q: Suzan just finished a new movie script. Paramount offers to buy the script for (a) $1,100,000 or…
A: Solved and explained in detail belowExplanation: To calculate Suzan's payoff if she chooses Option B…
Q: AutoSave Off File Home Insert Page Layout ch04_p24_build_a_model v Search Data Review View Automate…
A: The objective of the question is to calculate the yield to maturity and yield to call of a bond…
Q: You need to prepare for three large, upcoming project expenditures which will begin 3 years from…
A: The time value of money is a fundamental financial concept that states that a dollar today is worth…
Q: Current Attempt in Progress Sandhill Co. reports the following information (in millions) during a…
A: Financial ratios are quantitative measurements that are used to assess and examine many facets of…
Q: Carissa has a $178,000 home insured for Ovision, how much would the insurance company pay for a…
A: Total Value of Home = $178,000Insured Amount = $12000080% co-insurance provision = 80% of Total…
Q: What secondary source of data can I use for the following research topic: COVID-19 : A Threat to the…
A: The objective of the question is to identify secondary sources of data that can be used for research…
Q: QUESTION 11 a) Hiro has $10,000 to invest in the foreign-exchange market, with a focus on U.S.…
A: Currency arbitrage is a concept that is developed by gaining profit on exchanging the local currency…
Q: "If you are short 3 contracts on 3-year TSLA put option with strike price of $350, what will be your…
A: An option gives the option buyer a right to buy/sell the underlying asset at the option's strike…
Q: The Stock Analysis report will detail the portfolio that will be built for the client. This…
A: Market Overview and Microsoft's Current PerformanceThe general sentiment around Microsoft's stock is…
Q: 1,034.28 a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)?…
A: The yield to maturity refers to the amount of money that can be obtained from a bond if it is held…
Q: Brandtly Industries Invests a large sum of money in R&D; as a result, it retains and reinvests all…
A: In the valuation of a firm the discounted cash flow (DCF) approach is based on the present value of…
Q: Both Bond A and Bond B have 9.8 percent coupons and are priced at par value. Bond A has 9 years to…
A: Bonds' interest rate is the one of the major factor that affect the price of the bond at which it is…
Q: Crystal's investment manager offers him an interest rate of 7.0% compounded on his investments. If…
A: An annuity with different compounding refers to a series of regular payments or receipts over a…
Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…
A: The stock value today (current stock value) can be calculated by adding the present value of future…
Q: Procter and Gamble (PG) paid an annual dividend of $2.79 in 2021. You expect PG to increase its…
A: The DDM refers to the method of finding the stock value based on the future dividends paid by the…
Q: Fun With Finance is considering a new 3-year expansion project that requires an initial fixed asset…
A: The objective of the question is to calculate the net cash flow for each year of the project and the…
Q: A $1,000 face value, 6.5% coupon, Province of Ontario bond with 18 years to run until maturity is…
A: A bond provides the issuing organization access to debt capital from non-traditional sources such as…
Q: You are considering making a movie. The movie is expected to cost $10.5 million up front and take a…
A: The payback period and NPV are essential capital budgeting techniques utilized to assess project…
Step by step
Solved in 4 steps with 7 images
- Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
- Gallant Sports s considering the purchase of a new rock-climbing facility. The company estimates that the construction will require an initial outlay of $350,000. Other cash flows are estimated as follows: Assuming the company limits its analysis to four years due to economic uncertainties, determine the net present value of the rock-climbing facility. Should the company develop the facility if the required rate of return is 6%?Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.
- Taos Productions bought a piece of equipment for $79,860 that will last for 5 years. The equipment will generate net operating cash flows of $20,000 per year and will have no salvage value at the end of its life. What is the internal rate of return?Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?Malone Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $24330. The equipment will have an initial cost of $154350 and have a 5-year life. The salvage value of the equipment is estimated to be $21260 Factors to use for n-5.1-8% (DO NOT USE ANY OTHER FACTORS OR EQUATIONS) Future Value of an Annuity of $1 5.8666 Future Value of $1 1,4693 3.9927 0.6806 Present Value of an Annuity of $1 Present Value of $1 If the hurdle rate is 8%, what is the approximate not present value? Ignore income taxes
- Bunnings Ltd is considering to invest in one of the two following projects to buy a new equipment. Each equipment will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 8%. The cash flows of the projects are provided below. Equipment 1 Equipment 2 Cost $186000 $195000 Future Cash Flow Year 1 86000 97000 Year 2 93000 84000 Year 3 83000 86000 Year 4 75000 75000 Year 5 55000 63000 Required:a) Identify which option of equipment should the company accept based on Profitability Index? b) Identify which option of equipment should the company accept based on discounted pay back method if the payback criterion is maximum 2 years?Xavier Co. wants to purchase a machine for $37,400 with a four-year life and a $1,100 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,400 in each of the four years. What is the machine's net present value? Periods Present Valueof $1 at 8% Present Value of anAnnuity of $1 at 8% 1 0.9259 0.9259 2 0.8573 1.7833 3 0.7938 2.5771 4 0.7350 3.3121Poe Company is considering the purchase of new equipment costing $85,500. The projected annual cash inflows are $35,700, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine. Periods Present Value of 1 at 10% Present Value of an Annuity of 1 at 10% 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 $45,409. $14,857. $27,665. $(14,857). $(27,665).