ABM Enterprise would like to evaluate/analyze an investment proposal. Given the following: Investment amount - 450,000 (2022) Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14% a. NPV for the perio 2023 through 2029; b. Total NPV using manual computation; c. Total NPV using the Excel function; and
Q: If we use future value rather than present value to decide whether to make an investment, A) we wil...
A: Future Value is the value of cashflows in some date in future. Present value is the Discounted valu...
Q: Identify the concept of an optimal capital structure for a business firm.
A: We already know that a firm needs finances to run its business. Broadly we classify these finances i...
Q: The furniture store offers you no-money-down on a new set of living room furniture. Further, you may...
A:
Q: An industrial plant bought a generator set for P90,000. Other expenses including installation amount...
A:
Q: Use the following table: Series Large stocks Small stocks Average return 11.88 % 16.58 6.29 Long-ter...
A: Return on Portfolio = (W1 x Average Return on S1)+ (W2 x Average Return S2)
Q: f market is efficient, in managing an equity portfolio, you will adopt a. Indexing strategy b. Stock...
A: An efficient market is one where the security prices reflect all information available about that se...
Q: The firm's asset turnover measures A) the value of assets held per dollar of shareholder equity. B...
A: Firms assest turnover ratio:-The asset turnover ratio assesses a company's assets' ability to genera...
Q: Scenario Analysis and Portfolio Risk. The common stock of Leaning Tower of Pita Inc., a restaurant c...
A: Scenario analysis-It is a process of analyzing all possible events that could happen in the future ...
Q: You can earn $59 in interest on a $1,000 deposit for eight months. If the EAR is the same regardless...
A: Effective Annual Rate: It refers to the annual real rate taking into account compounding effects. He...
Q: All things equal, diversification is most effective when a. Securities returns are positively correl...
A: Diversification means using adding more than one security to the portfolio so that unsystematic risk...
Q: dyne heed to buy a refrig and they will need to borrow money in rate). If the refrigerator at Sears ...
A: In the add on method we need to calculate the interest for the given period and than we need to calc...
Q: The following is an extract from the balance sheet of Double Dee International PLC as at 31 March 20...
A: Capital Asset Pricing Model: It estimates a theoretically appropriate required rate of return of an...
Q: Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can...
A: maximum Southern Tours should pay today to acquire Holiday Vacations = present value of future cash ...
Q: To calculate free cash flow to equity (FCFE), the analyst needs which of the following: O A. Cash fl...
A: Free cash flow to equity is a measure in finance which tells us that how much cash is available with...
Q: Assume that the real interest rate is 2% per year, the default risk premium is 3%, the liquidity pre...
A: Given: Real interest rate = 2% Default risk premium = 3% Liquidity risk premium = 1%
Q: QUESTION THREE Kumba Iron Ore (Kumba) is a major supplier of iron ore to the steel industry and the ...
A: NPV and IRR are the methods of project appraisal. NPV represents the net value generated by the proj...
Q: You will invest $31 per month. If the rate is 8.07%, how much will you have in 6 years?
A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper...
Q: When the annual cash flows are unequal, the payback period is computed by adding the annual cash flo...
A: Year Annual cf Cumulative cf 1 20000 20000 2 30000 50000 3 40000 90000 4 50000 140000 5 60...
Q: The Principal-Agent Problem arises A) because managers have little incentive to work in the interes...
A: The principal-agent problem is the problem that arises due to a conflict of interest between the pri...
Q: Kumba Iron Ore (Kumba) is a major supplier of iron ore to the steel industry and the company is the ...
A: The computation of the present value of net cash inflows from investment to determine investment eff...
Q: When the return on sales (also known as net profit margin) is negative, what does this mean? Group o...
A: Net profit margin (NPM) or return on sales measures the profitability of the company. Higher the rat...
Q: A college student, needs to borrow $5,000 today for his tuition bill. He agrees to pay back the loan...
A: Time period is 5 years Borrowed amount is $5,000 Amount to be paid is $7012.76 To Find: Nominal int...
Q: The most likely outcomes for a particular project are estimated as follows: Unit price Variable cost...
A: With reference to variable cost, the decrease in variable cost would be categorized as best case sce...
Q: why is profit maximization supposedly not the most important goal of a company
A: Profit Maximization: The process of raising the profit earning capacity of the business is known as ...
Q: You just found out that your parents have $40,559 already saved when you are about to enter college,...
A: Present Value refers to the value of cash flows today which is to be received at some future time gi...
Q: Suppose a savings account pays 7% annual interest with interest compounded daily (assume there are 3...
A: Daily compounding Nominal rate= 7% Number of compounding periods = 365 Deposit = 2578 N = 3285 days ...
Q: Why is trading volume an important consideration when undertaking technical analysis?
A: Trading volume refers to the number of shares that was traded for a security for a given period of t...
Q: Albert Ang invested P88,000 at ABC Credit Union at 12% interest compounded quarterly. What is the ef...
A: Answer - The effective annual interest rate is the real return on a interest-paying investment when...
Q: A lender requires PMI that is 0.8% of the loan amount of $490,000. How much (in dollars) will this a...
A: A loan's PMI or Private mortgage insurance is a kind of mortgage insurance that is used by lenders w...
Q: How much would you pay for an asset that costs you 10,000 for each of four years in a row (starting ...
A: Discounting is a technique to compute the present value (PV) of future cashflows by using an appropr...
Q: The furniture store offers you no-money-down on a new set of living room furniture. Further, you may...
A: To find: Present value of furniture payments
Q: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to...
A: As you have asked question with multiple parts , we will solve the first 3 parts as per the policy p...
Q: You have just received a bonus of $10,000 and are looking to deposit the money in a bank account for...
A: Value after a period can be calculated as: = Principal * (1 + Periodic Interest rate)^number of conv...
Q: Your insurance agent is trying to sell you an annuity that costs $50,000 today. By buying this annui...
A: In finance annuity refers to that series of payments that are made/received at regular intervals. He...
Q: You have a portfolio with the following: Expected Return 10% Stock Number of Shares Price W $ 54 31 ...
A: Portfolio return is the weighted average expected return of all the securities in the portfolio. Thi...
Q: What lump sum of money must be deposited into a bank account at the present time so that $500 monthl...
A: Monthly withdrawals six years from now is $500 Time period of withdrawal is 5 years interest rate co...
Q: 4. At i= 4% per year, A for years 1 through 6 of the cash flows shown below is closest to: 1 2 3 5 6...
A: A = Annual cashflow i = 4% n = 6 years We need to find the present value of the given cashflows firs...
Q: Previous Balance Annual Percentage Rate (APR) (as a %) Monthly Periodic Rate Finance Charge (in $) P...
A: Finance charge is an interest payment which is paid on outstanding balance by using a given rate. In...
Q: t lump sum of money must be deposited into a bank account at the present time so that $500 per month...
A: Future withdrawal monthly depends on the monthly interest rate and period of withdrawal for which wi...
Q: e risk of investing in foreign stock markets depends on exchange rate uncertainty more than the risk...
A: Risk of investing outside country involves the risk of exchange rate due to which there is large vol...
Q: Brief Exercise 3-5 Determine accrual-basis and cash-basis net income (LO3-1, 3- 2) Rebel Technology ...
A: Under cash basis accounting, only cash received and cash payments will be considered for calculation...
Q: b) Herman bought a terrace house at RM650,000. He paid a 10% down payment and the balance was financ...
A: Calculate the present value of the loan taken by multiplying the purchase value which is RM650,000 w...
Q: ou need a new car and the dealer has offered you a price of $20,000, with the following payment op...
A: Option A - pay cash and receive a $2000 rebate. Cash to be paid = $20,000 - $2000 = $18,000 Option B...
Q: How would describe Rothschild and Co's relationship with its history ? How valuable is it ??
A: A bank is a type of financial institution that is allowed to take deposits and provide loans. Financ...
Q: A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assum...
A: Loan amount (P) = $40000 Interest rate (r) = 4% Period from June 10 to Oct 11 (d) = 123 Days
Q: What is the shape of the yield curve given the term structure below? What expectations are investors...
A: Yield Curve: The yield curve plots the different interest rates and maturities of bonds. It acts as ...
Q: The ranking of the four alternatives from most valuable to least valuable if the interest rate is
A: Present Worth: It represents the present value of the future sum of money or the present value of a ...
Q: Match the type of bank income (revenue) with the associated source. Revenue received from wealth man...
A: Interest Income: It is the main source of Income for banks and financial institution, interest recei...
Q: Quantum Corporation has two different bonds currently outstanding. Bond M has a face value of K20,00...
A: Face Value of M bond = K20,000 Time period of M bond = 20 years Semi-annual Payments = K800 for 8 ye...
Q: What is Bond A's interest rate?
A: Real Risk-Free Rate: It is the rate of return expected from a risk-less investment. It is computed b...
Step by step
Solved in 4 steps with 5 images
- A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost £ (Product A) Revenue/cost £ (Product B)0 (150,000) outlay (150,000) outlay 1 24,000 12,0002 24,000 25,3333 44,000 52,0004 84,000 63,333 Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Which product should be chosen and why?Use Table 8 to answer the next two questions. Assume the committed capital is $100, the management fee is 2.00%, and the carried interest is 20.00%. Year 2015 2016 2017 2018 2019 $5.40 What is the carried interest in 2019? Called-down Paid in capital Mgmt Fees $26 $31 $21 O $11.20 $9.12 $9.85 $10 $12 Table 8 Operating NAV before Carried NAV after Results Distributions Interest Distributions Distributions -$14 $6 $11 $41 $46 $5 $10The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $143,920 and annual net cash flows of $35,000 for each of the six years of its useful life. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Determine the internal rate of return for the proposal. %
- Calculate the APR of the following investment, entered as a percentage (Example: if your answer is 14.5%, enter 14.5 and not 0.145) Year Number Cashflow 0 -11000 1 3000 2 3500 3 2900 4 2800A company, which uses a MARR of 896, has been presented an investment opportunity that is summarized below, the standard notation for determining the Rate of Return for the proposed investment based on present worth is: year 1 3 8 Cash Flow $(440) $15 $35 $55 $75 $95 $115 $135 $155 (x1000) O 0 - 440,000 - 15,000(P/A, 196, 8) - 20,000(P/G, 196, 8) O None of them O 0 = -440,000 + 15,000(P/A, 196, 8) + 20,000(P/G, 196, 8) O 0= -440,000 + 155,00O(P/A, 196, 8) - 20,000(P/G, 196, 8) O ROR = -440.000 + 15.000(P/A, 896, 8) + 20,000(P/G, 896, 8) O 0 = -440,000 + 15,000(P/A, 196, 8) + 20,000(P/G. 196, 7) O 0--440.000 + 20.000(P/A, 196, 8) + 15,000(P/G, 196, 8)Company A has provided figures for two investment projects, only one of which may be chosen. These are the calculations based on the figures: Payback Period The Accounting Rate of Return / Return on Capital Employed Net Present Value Project A 2 years 4 months 27.08% £63,705 Project B 2 years 7 months 39.47% £74.971 Analyse and provide recommendations as to what project needs to be chosen based on the calculations above.
- Calculate the HPR of the following investment, entered as a percentage (Example: if your answer is 14.5%, enter 14.5 and not 0.145) Period Cashflow 0 -14100 1 3300 2 3300 3 3100 4 2800Using the following information, calculate the RAROC. •Risk-Adjusted Return: $80,000•Loan Amount: $3,000,000•Capital Requirement: 10%•Capital Ratio: 75% a) 28.75% b) 33.33% c) 35.56% d) 38.25%Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3 4. Invested Amount 15,000 20,000 30,000 50,000 $ $ $ U $ i = 6% 8% 12% 4% n = 12 10 20 12 Future Value
- Daymore plc is currently considering three investment opportunities. The following is the details of the investments:-Project A:-1. initial outlay $80m2. Future net inflows Year 1: $190mYear 2: $10mProject B:-1. initial outlay $140m2. Future net inflows Year 1: $180mYear 2: $120mProject C:-1. initial outlay $90m2. Future net inflows Year 1: $10mYear 2: $220mThe company has a capital budget that is restricted in the year of the investment and it will not be possible to undertake all three projects in full. The investment opportunities are independent of one another and each project is divisible (that is, it is possible to undertake part of an investment and to receive a pro-rata return). The cost of capital of the company is 12% and the company uses the net present value method of investment appraisal.Required:Calculate and determine the ranking of the three investment opportunities? (The ranking for the first choice, second choice, and third choice is 1, 2, and 3 respectively). Show…NPV Analysis; Sensitivity Analysis; Data Tables in Excel This assignment is designed tointroduce you to the preparation of both a one-variable and a two-variable Data Table in Excel. Suchtables are useful for conducting and reporting the results of a series of what-if analyses. Assume thata hypothetical 5-year investment would require a net investment outlay of $350,000 and would haveannual (after-tax) cash inflows of $100,000. Assume, too, that the company considering this investment uses a 10% discount rate (weighted-average cost of capital) for present-value calculations.Required1. Consult the specified online help file (Microsoft website) regarding the preparation of Data Tables. (Seefootnote 27.)2. Prepare a one-variable Data Table where you depict the NPV of the proposed investment at each of thefollowing discount rates: 8% to 12%, in increments of 0.5%. Round your answers to nearest whole dollar. 3. Prepare a two-variable Data Table where, in addition to the 10 discount rates…Show the solution in good accounting form. Thank you! 1. What is the actual return on plan assets for the current year? a. ₱ 100,000 b. ₱ 430,000 c. ₱ 370,000 d. ₱ 400,000