Discuss the advantages and disadvantages of using (a) payback, (b) net present value and (c ) internal rate of return as a method of capital investment analysis.

Q: The risk of an investment project that may have (1) 10% chance of losing $1000; (2) 20% chance of ga...

A: P1 = 10%, Cashflow (C1) = - $1000 P2 = 20%, Cashflow (C2) = $200 P3 = 30%, Cashflow (C3) = $800 P4 =...

Q: You win a lottery that will pay you $120,000 per month for 12 months, starting 1 month from now. Wha...

A: Present value of annuity in form of lottery winnings can be calculated as: = Annuity amount * Presen...

Q: A. Compute for the following ratios:

A: Financial statements are the documents which are provided by the company and is used for planning pr...

Q: The rate of return on T-bills is 3.25% and the expected return on the market is 9.50%. J&X, Inc. had...

A: The risk-free rate of return is the ideal rate of return on a risk-free investment. In principle, th...

Q: and sales. . $3,000,000.00 $2.500,000.00 $2.000,000.00 $1,500.000.00 $1.000.000.00 $500,000.00 Cash ...

A: Accounts receivables are the current assets for the firm as this is a situation where the goods are ...

Q: Explain what is risk decompositon

A: Risk is referred as the future uncertainty with reference to the deviation from an expected earnings...

Q: ex Unlimited is working upon the renovation of its factory upcoming year and for they expect an outf...

A: In BCR ratio analysis we can calculate the annual cost and annual benefits and find out the ratio of...

Q: Which of these two companies is best for investment?  Trend Probability Rate of Retrun (Company A) ...

A: We need to calculate expected return rate of return from investment by multiplying the probability w...

Q: Carlo Aldric wants to have P40,000 per year for 15 years during his retirement. What amount would yo...

A: Annual amount (P) = 40,000 Interest rate (r) = 5% Period (n) = 15  Years

Q: 9-10. (Growth rate in stock dividends and the cost of equity) Doosan Babcock, a electronic equipment...

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions a...

Q: As part of the crude-oil refining process in a large crude-oil refinery, a certain heat exchanger mu...

A: Present value When there is a series of different future cash flows associated with two options, the...

Q: interest rate on a 3-year treasury note is 2.75%, and 6-year notes are yielding 3.50%. Based on the ...

A: According to the expectation theory short term interest would be on the basis of long term interest ...

Q: urance’s stock currently sells for $17.25 a share. It just paid a dividend of $2.42 a share (that is...

A: The prices of stock can be determined based on the constant growth model using constant growth of di...

Q: This plant design, entitled “IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Phi...

A: Initial Cost = PHP 550,320,000 Other Cost = PHP 27,000,000 Time Period = 30 Years Rate of return = 2...

Q: determine the capitalized cost. Draw the diagram.

A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either r...

Q: You invest in a 55 month $5,163 zero-coupon corporate bond at a simple discount rate of 9.73 per yea...

A: Simple discount is straight discount on bond and that deduction from face value would give the price...

Q: Find the term of the following ordinary general annuity. State your answer in years and months (from...

A: Solution:- When an equal amount is paid at end of each period, it is called as ordinary annuity. Now...

Q: Selling price were sh. 40 per unit for A and sh. 20 per unit for B respectively. Average sales retur...

A: An estimate for a company's total revenue for the upcoming financial periods is called sales budget....

Q: High Growth Company pays no dividend for the next 3 years. The company will pay $4 dividend 4 years ...

A: The future price of a stock can be calculated by adding a growth rate to the dividend. The current a...

Q: Find the amount of P18450 after 5 years if it will be considered compounded semi- annually at the ra...

A: Interest is paid on the amount of the deposit. The rate of interest and number of periods depend on ...

Q: Find the term of the following ordinary general annuity. State your answer in years and months (from...

A: General annuity consists of flow of payments with same amount but the payment period is not same as ...

Q: Assume a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years. If...

A: Here selling price is 88,000 and down payment is 24,000 Hence loan amount = selling price - down pay...

Q: . Nonconstant growth stock s companies evolve, certain factors can drive sudden growth. This may lea...

A: Dividend yield It is referred to as the ratio which shows how much a company pays out in dividends e...

Q: a 30-year mortgage in the amount of $625,000 for a co-op. She secures a 7/1 ARM at an initial intere...

A: The mortgages are paid by the monthly payment which carry the payment of interest and payment of mor...

Q: ompute the annuity of the money ompounded monthly at the rate o O 665 O 755 O 801

A: Future value of annuity includes the annuity amount deposited and compound interest accumulated over...

Q: What is the IRR for installing a waste heat recovery system, given that the capital cost is $100,000...

A: Internal rate of return (IRR) of an alternative refers to the rate at which the Net present value (N...

Q: In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. ...

A: Net income = P 5 million Number of shares = 2 million Stock price initially = P 30

Q: A piece of machinery costs $7000 and has an anticipated $1200 salvage value at the end of its five-y...

A: Depreciation is the allocation of cost of asset over the useful life of the asset, because fixed ass...

Q: nt's employee benefits include family health insur % to the cost of coverage. She is paid monthly a ...

A: There is contribution of employee and also there is contribution from the employer also to the healt...

Q: 1. The NPV for each projects 2. The ANPV for each investment projects 3. Payback period for all proj...

A: Net present value (NPV) of an alternative refers to the variance between the initial investment or p...

Q: Suppose that the accumulated value of $1000 at the end of two years: Given that: a) the nominal annu...

A: Principal (P) = $1000 n = 2 years = 8 quarters

Q: A car loan of ​$37,412.98 is to be repaid with​ end-of-month payments of ​$725.06. If interest is 5​...

A: Loan amount (PV) = $37,412.98 Monthly payment (P) = $725.06 Interest rate = 5% Monthly interest rate...

Q: Bob Jones bought a new log cabin for $70,000 at 11% interest for 30 years. Prepare an amortization s...

A: The loan which are paid in installments as annuity follows the amortization process in which the pay...

Q: All the statements are incorrect regarding current ratio except? a. The more predictable a firm's ca...

A: Solution:- Current Ratio means the ratio of current assets to current liabilities of a firm. It meas...

Q: risk transformtion in banks

A: Risk is a term that is used for defining the uncertainty arising in the future from changes in expec...

Q: MACRS stands for a. Modified Annual Cost Recovery System b. Modified Audited Cost Recovery System c....

A: As per Internal Revenue Service (IRS) depreciation is an income tax deduction which allows businesse...

Q: Bank pays 5 percent simple interest on its saving account, whereas Collar Bank pays 5 percent intere...

A: Simple interest is the interest on principal amount and no interest on interest but in the compounde...

Q: For the next five years, Chard invests 50000 in a bank account at 12%interest. Will the original pri...

A: Principal Amount = 50,000 Interest Rate = 12% Inflation Rate = 75% Time Period = 5 Years

Q: payment

A: Payment per month refers to the amount, the borrower pays on monthly basis for the repayment of the ...

Q: A car loan of $28,641.62 is to be repaid with end-of-month payments of $582.15. If interest is 4% co...

A: EMI stands for equated monthly instalments. It is a series of payment provided by the borrower to a ...

Q: r=0% on deposits. Consumer needs to borrow $50 loan and the consumer has uncertain income of y=50,80...

A: Expected return Expected return is the sum of all returns times the associated probability. It is ca...

Q: You own stocks in an oil palm plantation company, and you read in the financial press that a recent ...

A: Debt to equity ratio has been increased from 30℅ to 55℅.  

Q: Lauren deposited $10,000 today. He plans to withdraw $700 every year. For how long can she withdraw ...

A: Solution:- When an equal amount is withdrawn starting one period from now, it is called as ordinary ...

Q: The matrix below contains payoffs and their associated probabilities for four alternative investment...

A: We need to find the addition of probabilities with payoff matrix for all investments to find the exp...

Q: ORogy (AM saler, more secure and more efficient. It Capital investment at time o Net revenues in yea...

A: IRR is the rate at which NPV is Zero. As the rate provided in the question is 26% we will take two r...

Q: Project L requires an initial outlay at t = 0 of $53,000, its expected cash inflows are $10,000 per ...

A: Given, Initial outlay of project L is $53,000. Expected cash inflows $10,000 per year.  

Q: Discuss the issues encountered in Enron Scandal and how the Sarbanes Oxley Act addressed those issue...

A: Since you have asked multiple question, we will solve the first question for you. If you want any sp...

Q: Given the returns of two shares F and H in the table below over the past 4 years. Find the average r...

A: The question related to portfolio management. we will first compute the average return of the portfo...

Q: What do you perceive as an immediate threat (or threats) to global corporate finance now? What do yo...

A: Corporate finance is actually concerned with how the businesses also used to fund their operations f...

Q: Which of the following is not a cash disbursement item? a. Cash purchases b. Cash dividend payment c...

A: Cash disbursement is also called cash payment made in specific period.