Q: Once capital markets are integrated, it is difficult for a country to maintain a fixed exchange rate...
A: Capital markets are places where money is exchanged between people who supply capital and those who ...
Q: Stock Percentage of Portfolio Expected Return Standard Deviation Artemis Inc. 20% 6.00% 29.00% Babis...
A:
Q: If a stock has a much higher than normal P/E ratio, investors probably expect ... O A. rapid growth ...
A: PE ratio is the ratio of the stock price and the earnings per share of a stock
Q: Suppose that a market exists where shares of stock trade on the floor of an exchange such as the the...
A: In a stock exchange the stocks are traded where the buyer & seller sets a price
Q: Assume that you want to deposit an amount (BD120,000.00) into an account three years from now in ord...
A: Time Value of money: Money received today is worth more than money received later, according to the ...
Q: 1. 1 2 3. 4 7 8. 6. 10 EOY 20 21 22 23 24 25 26 27 28 29 30 CF $100 $100 $100 $100 $100 Five deposit...
A: Cash flow in 2021 is $100 Cash flow in 2022 is $100 Cash flow in 2023 is $100 Cash flow in 2024 is $...
Q: How much would an investor expect to pay for a $1,000 par value bond with a 9% annual coupon that ma...
A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of...
Q: The number of compounding periods is equal to: O Number of years x rate O Number of years number of ...
A: Under compounding methods, interest is computed and charged on principal and interest both amounts. ...
Q: What are the drivers to the cost of revenue and the trends? b. Are there any trends in sales and ma...
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first t...
Q: If the net income after tax of the company is P4,000,00O, starting balance of assets is P500,000 and...
A: "Since you have asked multiple question, we will solve the first question for you.If you want any sp...
Q: Question 1: Know your numbers! You are a student at the University of North Anywhere. There are thre...
A: The cost price index shows the effect of inflation on the economy. It is one of the ways to calculat...
Q: ABC Corporation will be investing in X Corporation shares. X provided dividends of 45 per share last...
A:
Q: The annual demand for imported oranges is given by the following equation: QD= 600,000-30,000P whe...
A: Demand = Qd = 600000 - 30000P Supply = Qs = 30000P P = Price per Kg
Q: If you deposit BD1,500 now, BD3,600 three years, BD2000 seven years, and BD1,800 nine years from now...
A: Deposit now = 1500 Deposit in three years = 3600 Deposit in seven years = 2000 Deposit in nine years...
Q: Treasury auctions sell longțierm treasury bonds a. Monthly b. Daily c. Weekly d. Quarterly
A: Bonds are the debt securities issued by the corporations or the governments to arrange the funds. Bo...
Q: One of the roles of financial markets is to: O A. conduct fiscal policy. O B. transfer funds from le...
A: In today's era of globalization, Financial market is the most important and indispensable part of a...
Q: The APY of $1,000 invested at 6% with semiannual compounding is O 6.18% O 6.09% O 6.00% O 6.14%
A: Interest rate (r) = 6% Number of compounding per year (m) = 2
Q: The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its b...
A: Data given: Cost of equity(Ke) = 16% Before-tax cost of debt (Kd) = 8% Tax rate (T) = 25% Total debt...
Q: EBIT is $12,000 and interest expense is $3,000. If the tax rate is 20%, what is the net income? O $4...
A: Income taxes is the amount of taxes which needs to be paid by the individual or business to the gove...
Q: For any given interest rate and compounded frequency, there is always an equivalent compounded rate.
A: Effective annual compounding rate can be calculated for any given interest rate or compounding frequ...
Q: Which technique is expected to be most accurate in the valuation of an operating retail shopping cen...
A: The analytical process of determining the current (or future) worth of an asset or a firm is known a...
Q: Assume your organization wishes to make a Php 200,000 investment with a private equity firm in 2021....
A: a) Year Revenue Pv factor @ 12% Discounted value 2022 5000 0.8928 4464 2023 6000 0.7971 4783 ...
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: What would be the most likely reason for an equal-weighted index out performing a market-capitalisat...
A: Equal weighted index is the index in which investment is made into small cap securities, where as in...
Q: If the support and resistance levels of a stock are $15.15 and $15.60 and there has not been a break...
A: The support level refers to the lowest level of the stock price that it has not broken in a long tim...
Q: A business man who owns a chain of fast foods needs to borrow 15,000 dollars to remodel his business...
A:
Q: Jenny has no assets, but she has $1,000 to invest in one of two stocks. Stock A has a beta of 1.2 an...
A: One of the approaches for determining the needed rate of return for equity capital is to utilize the...
Q: Assume a hedge fund has a fee structure of 4 plus 25%. What return is the hedge fund required to gen...
A: Hedge funds are also known as the actively managed funds that uses various non - traditional and ris...
Q: Assume the total cost of a college education will be $360,000 when your child enters college in 15 y...
A: Future value required (FV) = $360,000 Present value (PV) = $58,000 Period (n) = 15 Years
Q: Calculate the profitability index of a 20-year project with a cost of $400,000 and an annual cash fl...
A:
Q: The pharmacy purchased a computer to maintain financial records. The cost of the computer was $1,863...
A: Cost of computer = $1863.00 Useful life = 6 Years Disposal value = $175.00
Q: ou found the following stock quote for DRK Enterprises, Inc., at your favorite website
A: a. Stock price = Dividend / Dividend yield = $0.83 / 0.0140 = $59.29
Q: Negative net working capital, is when current assets exceed current liabilities True False Mar...
A: The net working capital refers to the difference between the current assets and current liabilities....
Q: If the interest rate is at 8%, what is the maximum amount that can be loaned given a repaid of : Yea...
A: Maximum amount that can be loaned is the total sum of present value of all repayment.
Q: Suppose you invest $5,000 into a mutual fund that is expected to earn a rate of return of 7%. The am...
A: Mutual Fund is an investment option where large number of investors put their investment amount coll...
Q: Total Current Assets 700 610 Plant and Equipment 1,800 1,470 Less: Accumulated Depreciation 500 400 ...
A: Total Assets on the balance sheet is the sum of the current assets and fixed assets adjusted for dep...
Q: XYZ's receivables turnover is 4x. The accounts receivable at year-end are $600,000. The average coll...
A: Receivable turnover ratio is calculated as follows: = Net credit sales / Average account receivable
Q: 22. What is a de facto merger according to the Bank of Commerce vs. Radio Philippines Network, Inc. ...
A: De facto merger is a merger which there is common management structure established between two entit...
Q: Cecilia wants to pay for her daughter's college for four years by banking 20,000 dollars per year. H...
A:
Q: You bought a car and borrowed $25,067 for 48 months. If the rate is 3.56%, what is your monthly paym...
A: Loan amount (L) = $25067 n = 48 months r = 3.56% per annum = 0.29667% per month X = Monthly payment
Q: Candy Company had sales of $320,000 and cost of goods sold of $112,000. What is the gross profit mar...
A: Sales = $320,000 COGS = $112,000 Gross profit = Sales-COGS = 320,000-112000 ...
Q: A preferred stock will pay a dividend of $1 per year. If the annual return is 7.63%, what is the sto...
A: Stock price today = Annual dividend / Annual return where, Annual dividend = $1 Annual return = 7.63...
Q: Evan wants to start using a budget to curb spending and begin saving money. His estimates on income ...
A:
Q: you have two investmwnts, each of which has a 0.8% chance if a loss $12 million and a 99.2% chance o...
A: The process of discovering, analysing, and controlling threats to an organization's capital and prof...
Q: A $4,500 loan at 8.4% compounded monthly was settled by a single payment of $5,500 including accrued...
A:
Q: Discuss the dangers of ignoring the impact of business decisions on the full range of stakeholders, ...
A: In every business decision making is most important thing for the business continuity. Business need...
Q: Assume that in 2018, the first edition of a comic book was sold at auction for $597,20o. The comic b...
A: Price in 1935 (P0) = $0.05 Price in 2018 (Pn) = $597,200 Period form 1935 to 2018 (n) = 83 Years
Q: Five years ago (t=0), Cooper Inc. issued a 20-year zero-coupon bond with a yield to maturity of 10%....
A: Par value of bond (FV) = $1000 Yield to maturity after 5 years = 6% Semi annual rate (r) = 6%/2 = 3...
Q: Find the nominal rate of an investment with duration of 4 and a half years compounded once a year. T...
A: Time period is 4.5years Present value of investment is Php50,010 Future Value is Php60,072.82 To Fin...
Q: What is the indicated value of the subject property using direct capitalization, rounded to the near...
A: Direct Capitalization Method: This method computes the value by dividing the net operating income re...
Crazy Burger Shop has the following investment opportunity:
- Burger machinery at t=0 costs $6,000.
- The cost of making burgers is $2,000 per year at t=1, t=2, and t=3.
- The burger machinery is depreciated using the straight-line method to $1,500 over 3 years.
- The market value of the burger machinery after three years is $2,600.
- Estimated annual sales are $4,500 per year at t=1, t=2, and t=3.
- The required return is 15%.
- The tax rate is 18%.
- Assume no working capital requirements.
What is the NPV of this project?
| A. |
$259.97 |
|
| B. |
$1,006.62 |
|
| C. |
$876.44 |
|
| D. |
$-702.92 |
Step by step
Solved in 2 steps
- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 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.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?Chauhan Restaurant is considering the purchase of a soufflé maker that costs $11,100. The soufflé maker has an economic life of 8 years and will be fully depreciated by the straight-line method. The machine will produce 1,600 soufflés per year, with each costing $2.80 to make and priced at $4.75. The discount rate is 12 percent and the tax rate is 25 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
- Chauhan Restaurant is considering the purchase of a soufflé maker that costs $10,100. The soufflé maker has an economic life of 6 years and will be fully depreciated by the straight-line method. The machine will produce 1,700 soufflés per year, with each costing $2.80 to make and priced at $4.75. The discount rate is 12 percent and the tax rate is 25 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Emperor’s Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 7 million jars of makeup a year. Fixed costs are $2.4 million a year, and variable costs are $1.50 per jar. The product will be priced at $2.30 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 40% a. What is project NPV under these base-case assumptions? b. What is NPV if variable costs turn out to be $1.60 per jar? c. What is NPV if fixed costs turn out to be $2.2 million per year? d. At what price per jar would project NPV equal zero?Emperor’s Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 7 million jars of makeup a year. Fixed costs are $3.1 million a year, and variable costs are $1.20 per jar. The product will be priced at $2.90 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 40%. a. What is project NPV under these base-case assumptions? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What is NPV if variable costs turn out to be $2.00 per jar? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) c. What is NPV if fixed costs turn out to be $2.8 million per year? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) d. At what price per jar would project…
- Emperor's Clothes Fashions can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 6 million jars of makeup a year. Fixed costs are $3.8 million a year, and variable costs are $2.50 per jar. The product will be priced at $3.90 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 30%. a. What is project NPV under these base-case assumptions? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. b. What is NPV if variable costs turn out to be $2.80 per jar? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. c. What is NPV if fixed costs turn out to be $3.3 million per year? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. d. At what price per jar…Emperor’s Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 7 million jars of makeup a year. Fixed costs are $3.1 million a year, and variable costs are $1.20 per jar. The product will be priced at $2.90 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 40%. What is project NPV under these base-case assumptions? What is NPV if variable costs turn out to be $2.00 per jar? What is NPV if fixed costs turn out to be $2.8 million per year? At what price per jar would the project's NPV equal zero?Emperor's Clothes Fashions can invest $7 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 8 million jars of makeup a year. Fixed costs are $2.1 million a year, and variable costs are $1.20 per jar. The product will be priced at $2.70 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 12%, and the tax rate is 40%. a. What is project NPV under these base-case assumptions? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. b. What is NPV if variable costs turn out to be $1.80 per jar? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. c. What is NPV if fixed costs turn out to be $1.7 million per year? Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places. d. At what price per jar…
- Pappy’s Potato has come up with a new product, the Potato Pet. Pappy’s paid $50,000 for a marketing survey to determine the viability of the product. It is estimated that Potato Pet will generate sales of $780,000 per year. The fixed costs associated with this project will be $178,000 per year and variable costs will amount to 30% of sales. The equipment will cost $600,000 and be depreciated in a straight-line manner for the four years of the project life. It can be sold for $20,000 at the end of the project. The initial net operating working capital is $40,000 and will increase by $10,000 each year until the end of the project. Pappy’s is paying a 25% tax rate and has a required rate of return of 6%.The NPV of this project is $__________________.Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $90,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Labor costs would increase $1,500 per year using the gang punch, but raw material costs would decrease $11,500 per year. MARR is 5%/year. What is the internal rate of return of this investment?In a bio-based material recycling company, the operation managers are considering a twin-screw extruder with a price of 12,000 OMR and another 2,000 OMR will be spent for shipping and installation of the extruder. The estimated net income generated from this machine is 3,500 OMR per year. The extruder will be used for 5 years, and then it will be sold for an estimated market value of 2,500 OMR. The extruder MARCS property class is 5 years. If the effective income tax rate (t) is 40% and the after-tax MARR is 10%. (a) What is the after-tax IRR for this project? (use trial and error procedure and GDS) (b) Should this extruder be purchased by the company?
