What is the NPV for the car selection example below?
Example: Buy an Electric Vehicle?
Chevy Malibu: $30,000 cost 12K miles/yr 30 mph Maintenance: $1K in year 1; 5% CAGR Resale of $5K in ten years Gas: $3.50/g; 10% CAGR D = 7%
Nissan Leaf: $40,000 cost 12K miles/yr 5 miles per kWh Maintenance: $700 in year 1; 5% CAGR New battery in year 5: $5,000 Resale of $3K in ten years $0.11/kWh; 10% CAGR D = 7%
In: Finance
Suppose there is a 3-year bond with a $1000 face value, 12% coupon payments and a 6% yield to maturity.
a) Without any calculation, briefly explain whether this bond will be selling a premium or a discount
b) Calculate the price of this bond.
c) Calculate the duration of this bond. d) If someone buys this bond and holds it for three years, what is their rate of return? e) Suppose after one year, interest rates in the economy fall by 2%. If the person that bought this bond sells it at that time, what would be their rate of return? (Hint: First think about what the fall in interest rates will do to the bond’s price and then think about the rate of return.)
In: Finance
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Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,080,000 and will last for 4 years. Variable costs are 35 percent of sales, and fixed costs are $142,000 per year. Machine B costs $4,780,000 and will last for 6 years. Variable costs for this machine are 28 percent of sales and fixed costs are $88,000 per year. The sales for each machine will be $9.56 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight-line basis. |
| Required: |
| (a) |
If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A? (Do not round your intermediate calculations.) |
|
$-8,689,803.43 $-3,956,940 $-2,741,379.27 $3,472,620.73 $-4,373,460 |
| (b) |
If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B? (Do not round your intermediate calculations.) |
|
$-11,392,534.25 $-9,019,583.22 $3,598,190.06 $-8,160,575.3 $-2,615,809.94 |
In: Finance
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Shanken Corp. issued a 25-year, 4.7 percent semiannual bond 2 years ago. The bond currently sells for 94 percent of its face value. The book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 12 years left to maturity; the book value of this issue is $45 million and the bonds sell for 50 percent of par. The company’s tax rate is 22 percent. |
| a. |
What is the company's total book value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) |
| b. |
What is the company's total market value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) |
| c. |
What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
Suppose that the average waiting time for a patient at a physician's office is just over 29 minutes. In order to address the issue of long patient wait times, some physicians' offices are using wait-tracking systems to notify patients of expected wait times. Patients can adjust their arrival times based on this information and spend less time in waiting rooms. The following data show wait times (minutes) for a sample of patients at offices that do not have a wait-tracking system and wait times for a sample of patients at offices with a wait-tracking system.
| Without Wait- Tracking System |
With Wait-Tracking System |
| 23 | 31 |
| 62 | 10 |
| 15 | 13 |
| 21 | 17 |
| 32 | 11 |
| 45 | 35 |
| 10 | 10 |
| 26 | 2 |
| 16 | 11 |
| 35 | 16 |
| (a) | Considering only offices without a wait-tracking system, what is the z-score for the 10th patient in the sample (wait time = 35 minutes)? |
| If required, round your intermediate calculations and final answer to two decimal places. | |
| z-score = | |
| (b) | Considering only offices with a wait-tracking system, what is the z-score for the 6th patient in the sample (wait time = 35 minutes)? |
| If required, round your intermediate calculations and final answer to two decimal places. | |
| z-score = | |
| How does this z-score compare with the z-score you calculated for part (a)? | |
| The input in the box below will not be graded, but may be reviewed and considered by your instructor. | |
| (c) | Based on z-scores, do the data for offices without a wait-tracking system contain any outliers? |
| - Select your answer -YesNoItem 4 | |
| Based on z-scores, do the data for offices with a wait-tracking system contain any outliers? | |
| I need the z-score |
In: Finance
You plan to purchase a $180,000 house using a 15-year mortgage
obtained from your local credit union. The mortgage rate offered to
you is 5.5 percent. You will make a down payment of 10 percent of
the purchase price.
a. Calculate your monthly payments on this
mortgage.
b. Calculate the amount of interest and,
separately, principal paid in the 20th payment.
c. Calculate the amount of interest and,
separately, principal paid in the 110th payment.
d. Calculate the amount of interest paid over the
life of this mortgage.
(For all requirements, do not round intermediate
calculations. Round your answers to 2 decimal places. (e.g.,
32.16))
In: Finance
The Baldwin Company is considering investing in a machine that
produces bowling balls. The cost of the machine is $100,000 and
production is expected to be 8,000 units per year during the
five-year life of the machine. The expected resale value is $5,000
(in real terms).
Since the interest in bowling is declining, the management believes
that the nominal price of bowling balls will increase at only 2%
per year. The nominal price of bowling balls in the first year will
be $20. On the other hand, plastic used to produce bowling balls is
rapidly becoming more expensive. Because of this, production costs
are expected to grow at 10% (nominally) per year. First-year
nominal production costs will be $10 per unit.
The company's nominal cost of capital is 15%. The rate of inflation
is 5%. Ignore taxes. Should the project be undertaken?
Please give me a answer with equations and step by step solutions so that I can understand.
In: Finance
Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.6 million and its accounts payable were $375,000. Sales, which in 2016 were $2.7 million, are expected to increase by 20% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $475,000 in 2016, and retained earnings were $260,000. Wallace has arranged to sell $155,000 of new common stock in 2017 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2017. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its profit margin on sales is 3%, and 50% of earnings will be paid out as dividends.
What was Wallace's total long-term debt in 2016? Round your answer to the nearest dollar.
What were Wallace's total liabilities in 2016? Round your answer to the nearest dollar.
How much new long-term debt financing will be needed in 2017? (Hint: AFN - New stock = New long-term debt.) Round your answer to the nearest dollar.
In: Finance
What is the value per share be of a company with the following dividends?
Next years Dividend is expected to be $1.40
Expect Div Growth rates
13.40%
12.70%
10.80%
9.65%
7.70%
ROE = 13.47%
Plowback Rate= 61%
US T-BILL = 1.15%
BETA = 1.07
expect ret in Mkt = 10.83%
Please compute with excel
In: Finance
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Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project. Guthrie Enterprises needs someone to supply it with 152,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $1,920,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $162,000. Your fixed production costs will be $277,000 per year, and your variable production costs should be $9.70 per carton. You also need an initial investment in net working capital of $142,000. If your tax rate is 34 percent and you require a return of 12 percent on your investment, what bid price per carton should you submit? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
In: Finance
Abner Corporation's bonds mature in 17 years and pay 11 percent interest annually. If you purchase the bonds for $850, what is your yield to maturity?
In: Finance
1.a) Briefly describe how the Efficient Frontier and the Capital Allocation Line (CAL) are determined. Include all steps and procedures.
1.b) The CAL has the following parameters: Risk-free rate is 3 percent, return on the optimal risky portfolio is 12 percent, with a standard deviation (SD) of 20 percent. What is your expected return if you limit your risk to a Standard Deviation of 10 percent?
1.c) How do you achieve a 35 percent return using the parameters above? Explain and show precisely how you would achieve the return and also calculate the standard deviation of the portfolio.
This is all the info I've been given. I need to draw the efficient frontier and capital allocation line and describe both.
In: Finance
The market price is $1,200 for a 9 -year bond ($1,000 par value) that pays 8 percent annual interest, but makes interest payments on a semiannual basis (4 percent semiannually). What is the bond's yield to maturity?
In: Finance
discuss the role of paralegals with reference to the south african constitution
In: Finance
Provide and example of tax elimination. Explain.
In: Finance