Suppose BSA Corporation projected to generate the following for the next five years, in million pesos: Operating Expense (excluding depreciation) 30.00 Year Revenue Тахes 1 50.00 6.00 2 55.00 33.00 6.60 60.00 36.30 7.26 4 66.55 39.93 7.99 5 73.21 43.92 8.78 A property was purchased for Php150 Million. The terminal value was assumed based on the growth rate of the cash flows The outstanding loan is Php16.62 Million. The required rate of return for this business is 12%. Given the information above answer the following: How much is the Terminal Value? Assuming there are no outstanding loans, how much is the Discounted Net Cash Flows to the Equity? Assuming that the required rate of return is 10%, how much is the Discounted Net Cash Flows to the Equity?

Suppose BSA Corporation projected to generate the following for the next five years, in million pesos: Operating Expense (excluding depreciation) 30.00 Year Revenue Тахes 1 50.00 6.00 2 55.00 33.00 6.60 60.00 36.30 7.26 4 66.55 39.93 7.99 5 73.21 43.92 8.78 A property was purchased for Php150 Million. The terminal value was assumed based on the growth rate of the cash flows The outstanding loan is Php16.62 Million. The required rate of return for this business is 12%. Given the information above answer the following: How much is the Terminal Value? Assuming there are no outstanding loans, how much is the Discounted Net Cash Flows to the Equity? Assuming that the required rate of return is 10%, how much is the Discounted Net Cash Flows to the Equity?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Suppose BSA Corporation projected to generate the following for the next five years, in million pesos: Operating Expense (excluding depreciation) Year Revenue Тахes 1 50.00 30.00 6.00 2 55.00 33.00 6.60 3 60.00 36.30 7.26 4 66.55 39.93 7.99 5 73.21 43.92 8.78 A property was purchased for Php150 Million. The terminal value was assumed based on the growth rate of the cash flows. The outstanding loan is Php16.62 Million. The required rate of return for this business is 12%. Given the information above, answer the following: 1. How much is the Terminal Value? 2. How much is the Discounted Net Cash Flows to the Firm? 3. How much is the Net Cash Flow to the Equity? 4. Assuming there are no outstanding loans, how much is the Discounted Net Cash Flows to the Equity? 5. Assuming that the required rate of retum is 10%, how much is the Discounted Net Cash Flows to the Equity?
A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He expects and incremental revenue of ₱460,000 while costs to be incurred are: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The NPV would be? ₱ 87,203 ₱ 152,221 (₱ 23,334) ₱ 78,302 ₱ 63,712 ₱ 28,486
A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He expects and incremental revenue of ₱460,000 while costs to be incurred are: Costs of sales→₱120,000; Marketing, admin, and maintenance→ ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The NPV would be?
Columbia Comp. invests RM 270,000 in a project that is depreciated on a straight-line basis over three years to zero disposal value. The relevant details for the project over its 3-year life are shown below. 2 Calculate the accounting rate of return for the project. Year 1 Year 2 Year 3 Sales RM 220,000 RM 190,000 RM 200,000 Cash expenses 50,000 40,000 60,000 Depreciation 90,000 90,000 90,000 Earnings before taxes 80,000 60,000 50,000 Taxes @ 30% 24,000 18,000 15,000 Operating income after taxes 56,000 42,000 35,000
A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He determined that he will incur the following annual costs: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The breakeven lease per year would be?a. ₱ 460,000 b. ₱ 503,717 c. ₱ 521,756d. ₱ 468,203 e. ₱ 436,127 f. ₱ 324,846
A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He determined that he will incur the following annual costs: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The breakeven lease per year would be? ₱ 460,000 ₱ 503,717 ₱ 521,756 ₱ 468,203 ₱ 436,127 ₱ 324,846
Nestor Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Year 1 Year 2 Year 3 Year 4 Year 5 Annual Net Cash Flows $ 40,000 $ 40,000 $ 35,000 $ 35,000 $ 30,000 Compute the payback period for this investment. (Round to two decimal places.) Multiple Choice O 2.85 years. 2.57 years.
The NUBD Co. acquired a new machine for P160,000 which will be depreciated on a straight-line basis over ten year period. A full year’s depreciation was taken in the year of acquisition. The accounting rate of return is expected to be 15% on the initial increase in required investment. If we assume a uniform cash inflow, the annual cash flow from operations, net of income taxes, will be
The acquisition price of a property is $380,000. The loan amount is $285,000. If the property’s NOI is expected to be $22,560, operating expenses $12,250, and the annual debt service $19,987, the debt yield ratio (DYR) is approximately equal to: A. 7.9% B. 8.3% C. 8.1% D. 7.5%
A lessor made an investment in an asset with net cost of investment of ₱800,000 and intends to lease it out for a 5-year term. He determined that he will incur an annual cost of ₱250,000. Tax rate is 25%. Annual depreciation is ₱160,000. Cost of capital is 15%. The breakeven lease per year would be? ₱ 494,450 ₱ 471,503 512,356 ₱ 323,886 ₱ 361,417 ₱ 514,876
Pads Corp. is contemplating the purchase of a large stamping machine which will cost Php 500,000. With additional transportation and installation costs of Php 40,000 and 65,000. Its market value the end of 5 years is estimated at Php 75,000. What is the accumulated depreciation at the end of year 4 using, (a) declining balance method? (b) sum of the years method? (c) sinking fund method (9%)? Round off your answers to the nearest 2 decimal places.
Explorer Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) $28,800 Working capital 3,200 Operations (per year for 4 years): Cash receipts $20,000 Cash expenditures 8,800 Disinvestment: Salvage value of equipment $2,400 Recovery of working capital 3,200 Discount rate: 10 percent Additional information for interest rate of 10 percent and four time periods: Present value of $1 0.68301 Present value of an annuity of $1 3.16987 What is the net present value for the investment? Select one: a. $14,658 b. $35,503 c. $3,825 d. $7,327

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