a) Calculate the payback period for both products in years and months, not as a decimal. Please present answer to nearest month. b) Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. c) Which product should be chosen and why?
Q: What is the firm’s depreciation and amortization expense if its average tax rate is 34 percent
A: Depreciation is the systematic allocation of cost of a tangible asset over its useful life.…
Q: A bond's market price is $775. It has a $1,000 par value, will mature in 8 years, and has a…
A: The bond's YTM can be calculated using the RATE Function in excel. RATE = (NPER, PMT, -PV, FV,…
Q: A bond issued by Ford on May 15, 1997 is scheduled to mature on May 15, 2097. If today is November…
A: Bonds are the debt securities which are issued by the corporations or the government to raise the…
Q: Ricardo wants to buy a large fishing boat so that he can go deep sea fishing. He needs $100,000 and…
A: Solution:- When some amount is borrowed, it can either be repaid as lump sum payment or in…
Q: A new iphone model is offered at Php 78799 cash but can be acquired through installment at an…
A: Phone amount (P) = Php 78799 Monthly interest rate (r) = 0.01 (i.e. 0.12 / 12) Monthly period (t) =…
Q: Assuming that four annual deposits of ($1000) are occurred but the first payment deposit at end of…
A: The annual payments are going to occur will be equivalent to the future value of annual payment that…
Q: Compute the appraisal ratio for portfolio A. Round off your final answer to three digits after the…
A: The appraisal ratio compares the return on their stock picks to the risk of such picks to determine…
Q: Optional deduction is computed as a.net income less net expenses b.gross sales multiply to 40%
A: The answer is option b. gross sales multiply to 40%
Q: You come across two banks offering different compounding interest rates. Public Bank offers 12…
A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…
Q: What is reinvestment risk (in the context of interest rate risk)? How does reinvestment risk impact…
A: A bank is a financial institution which is authorized to deposit money and provide loans. Financial…
Q: You are managing a portfolio of £20 million. Your target duration is 6 years, and you can choose…
A: The portfolio is referred to as the basket of different financial assets in which investment is made…
Q: Abdul Rahman borrowed an amount of nominal due is payment value ($2000) on 1/2/2020. The on 9/1,…
A: Bartleby's Guideline “Since you have asked multiple question, we will solve the first question for…
Q: Analyze the data below and write what each of these values mean in one coherent paragraph
A: Data given:: Characteristic Revenue share Fashion and leather goods 48% Selective retailing…
Q: immunization of a bond portfolio
A: Immunization is a risk-reduction approach that aligns asset and liabilities duration to protect…
Q: a. what is the inflation premium? b. what is the fair interest rate on Moore Corporation 30-year…
A: Inflation Premium: It is the compensation paid to the investor for taking on inflation risk. It is…
Q: You have decided to buy a perpetual bond. The bond makes one payment at the end of every year…
A: To calculate the payment at the end of each we will use below formula Annual payment = PV*r Where…
Q: Phoenix Television network Ltd is considering investing in a new television series,entitled"it's a…
A: NPV Net present value (NPV) is the present value of all incremental cash flows less initial cost.…
Q: Ann wants to buy a building. The asking price is $7,500,000. Her lender has a maximum LTV…
A: LTV means Loan To Value ratio. It is the maximum amount of loan that can be borrowed against the…
Q: Explain the main criterion to evaluate the investment policy of a business.
A: Investment criteria are the elements that financial and strategic purchasers use to evaluate an…
Q: Enterprise, Inc. bonds have an annual coupon rate of 9 percent. The interest is paid semiannually…
A: Price of bond is the present value of coupon payment and present value of par value of bond taken on…
Q: $10,000 is invested at 7% compounded annually. Over the next 25 years, how much of the investment's…
A: For calculation of total interest earned on original, we need to use simple interest formula. For…
Q: what is the present value of all your profits over the next 5 years? SHOW A “ROUGH” CASH FLOW…
A: Time value of money (TVM) refers to the method used to measure the amount of money at different…
Q: (Preferred stock valuation) Calculate the value of a preferred stock that pays a dividend of…
A: Annual dividend per share (D) = $8.00 Required return (r) = 0.15 Value of a preferred stock (P0) = ?…
Q: You work for a pharmaceutical company that has developed a new drug. The patent on the drug will…
A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…
Q: Calculate the future value of an ordinary annuity consisting of monthly payments of $450 for five…
A: An ordinary annuity is an annuity where the periodic payment occurs at the end of the period.
Q: A small group of SAS1 students form an investment club in order to put their vast mathematics of…
A: This problem can be solved in light of loan amortization and future value. Loan amortization can be…
Q: 42 98 19
A: The incremental borrowing rate is the interest rate a borrower would pay to borrow money to fund an…
Q: (Related to Checkpoint 5.5) (Solving for n) Jack asked Jill to marry him, and she has accepted under…
A: Here, Given Present Value = 67,960 Future Value = 330,000 Interest rate per annum = 4.5%
Q: Cash Flow Vanderheiden Hog Products Corp. provided the following financial information for the…
A: Cash flow from operating activities is the cash generated from the normal operating activities of…
Q: 30. Gina has 250/500/50 liability insurance and $50,000 PIP insurance. She changes lanes too…
A: Insurance: It is a protection from financial loss and a form of risk management, that is primarily…
Q: On January 2, 2019 Sona bought 10 lots (1,000 stocks) of COPA at $10,000,000. During that year, she…
A: To Find: Aritmatic return Geometric return Money weighted return
Q: What is the beta of the portfolio invested 20% in Formula and 80% in Dormula?
A: Capital asset pricing model (CAPM) is a model or method which is used by the company to define the…
Q: What would you expect the nominal rate of interest to be if the real rate is 5.3 percent and the…
A: Nominal Interest Rate: It refers to the rate of interest that does take into consideration the…
Q: xplain the role of the Risk Manager in fraud detection Explain the role of the Risk Manager in fraud…
A: In the world of finance risk managers play a very important role when it comes to detection of…
Q: buys a property that costs $1,000,000. The property is p ate NOI as follows:
A: IRR is rate of return at which present value of cash flow is equal to initial investment or we can…
Q: QUESTION 19 Ann purchased a property for $1,000,000. She bought the property at a 7.00% cap rate.…
A: Return on Equity: It is the analyse of financial performance that is calculated by dividing net…
Q: Financial analyst of Castle Investment Trust has gathered the following information on FRIVY Inc.…
A: Share price: Share price is the current market price of the share. It is the price of the share at…
Q: urberry Group PLC is a British fashion clothing company. It is considering the replacement of one of…
A: Weighted average cost of capital can be calculated as weighted cost of equity and debt after tax and…
Q: 3.) Engr. De Ocampo is planning to buy a condominium. If he is to pay 100k per month with a down…
A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…
Q: 5. Juan takes out a 3-year multi-purpose loan for P200,000 from a loaning institution. The annual…
A: The annual interest rate is 12%. So, the monthly interest rate will be 12%/12months = 1%. Monthly…
Q: D6) If the corporate tax rate in a foreign country is 20%and the tax rate in the home country is…
A: When there is a change in tax rate then it will have to be considered as it will affect the…
Q: on. How much should be deposited?
A: Present Value of Annuity: It represents the present worth of the future value of the annuity and is…
Q: 1. If P5,000 is invested in a time-deposit for 2 years in a bank that offers 4% annual interest…
A: Future Value: The future value is the amount that will be received at the end of a certain period.…
Q: Leon's 6-month premium for auto insurance is $754.34, if he pays it all at once. If he decides that…
A: Auto insurance is used to protect a vehicle owner in case of emergencies related to vehicles like…
Q: Investment A: at 6.5% compounded daily Investment B: at 7% compounded semi-annually i. Which…
A: In this question, we have to select the alternative which gives the highest effective annual rate of…
Q: What are cost-control processes?
A: In every business, cost is the most relevant and sensitive data that every management wants to…
Q: Marissa converted an RRSP balance of $125,000 into an RRIF that will pay h $1,850 at the end of…
A: The interest rate is the amount that a lender or borrower gets or pays in interest over a period of…
Q: Kamryn Brown is single and earns $50,000 in taxable income and will use the following tax rate…
A: The question is related to the taxation of single individual as per the tax slab given.
Q: How much will P54,200 be in 24 months at 4-% compounded monthly? 4 A) P388,579.66 B) P59,590.33 C)…
A: The time value of money concept is to determine the future value and present value of a single…
Q: You are the junior financial manager at Caribbean Capital Market Limited and you have been asked to…
A: Semiannual coupon amount (C) = $30 (i.e. $1000 * 0.06 / 2) Semiannual required return (r) = 0.0375…
A company is thinking in investing in one of two potential new products for sale. The
projections are as follows:
| year | Revenue/cost £ (Product S) | Revenue/cost £ (Product V) |
| 0 | (150,000) outlay | (150,000) outlay |
| 1 | 14000 | 15000 |
| 2 | 24000 | 25333 |
| 3 | 44000 | 52000 |
| 4 | 84000 | 63333 |
a) Calculate the payback period for both products in years and months, not as a
decimal. Please present answer to nearest month.
b) Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%.
c) Which product should be chosen and why?
d) Calculate the
e) Outline the advantages and disadvantages of the IRR and payback using
appropriate academic sources.
Step by step
Solved in 2 steps with 2 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?Assume that at the beginning of the year, you purchase an investment for $2,500 that pays $67 annual income. Also assume that the investment's value has decreased to $2,350 at the end of the year. a. What is the rate of return for this investment? b. Is the rate of return a positive or a negative number? Complete this question by entering your answers in the tabs below. Req 1 Req 2 What is the rate of return for this investment? Note: Enter your answer as a percent rounded to 2 decimal places. Input the amount as a positive value. Rate of return % Req 1 Req 2 >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 2800
- Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =1400 OMR; Year 3=1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one: a. None b. 1.69 c. 1.83 d. 1.26 e. 1.48What will be the total present value of an income flow starting with 1500TL/year in year 3 and ending in year 12 appreciating at a rate of 0.16, together with a lump sum income of 50 000TL to occur in year 15 if i:0.25? О а. less than 2000 TL O b. between 2001-4000 TL Oc. between 4001-6000 TL O d. between 6001-9000 TL O e. greater than 9001 TLA customer is offered an investment where interest is calculated according to the force of interest,t {0.02t 0 ≤ t ≤ 3, 0.045 t > 3If the customer invest GH¢1000 now, what rate of interest, compounded quarterly is earned over the first 4 year period.
- An estimate has the following cost and revenue cash flows. The cash flows are assumed to occur at the end of the year. (a) If interest is 10%, find the net present worth, net future worth, and net annual equivalentworth.(b) Find the rate of return. (Hint: The guessing range is 25 to 30%).(c) Present a summary of the four methods Year Cost Revenue 0 $800 $0 1 - $450 2 - $425 3 - $400The sales and profit for two years were as below: (IN OMR) Sales Profit 2019 30000 10000 2020 20000 5000 What will be the correct amount of Sales required to earn a profit of OMR 20000? Select one: O a. OMR 50000 O b. OMR 45000 O c. OMR 60000 O d. OMR 40000What will price be in 1 year? c. What do you expect to happen to price in the following year? (Round your dollar value to 2 decimal places.) d. What is your estimate of DEQS’s intrinsic value per share if you expected DEQS to pay out only 10% of earnings starting in year 6? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
- Calculate the EAR of the following investment, entered as a percentage (Example: if your answer is 0.145, enter 14.5) Year Number Cashflow 0 -11400 1 3500 2 3000 3 3100 4 2800 Your Answer:To calculate how many years (n) an investment (P) must be kept in an account that earns interest at i%, in order to triple in amount, which of the following expressions should be used? (a) n = -P + F(P/F, i%, n) (b) n = [log (F/P)]/[log (1+ i%)] (c) n = [ In(– P +F)]/[In i%] (d) n = -F(1 + i%)PAttempt History Current Attempt in Progress Wildhorse Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Cost Old Equipment Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs $80,240 $40,300 8 years $9,920 $0 $35,100 Cost New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs $38,000 8 years $4,800 $29,900 Depreciation is $10,030 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,800.