| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | –$353,467 | –$14,969 |
| 1 | 25,200 | 4,208 |
| 2 | 59,000 | 8,511 |
| 3 | 57,000 | 13,672 |
| 4 | 418,000 | 9,131 |
| Whichever project you choose, if any, you require a 6 percent return on your investment. |
| a. What is the payback period for Project A? |
| b. What is the payback period for Project B? |
| c. What is the discounted payback period for Project A? |
| d. What is the discounted payback period for Project B? |
| e. What is the NPV for Project A? |
| f. What is the NPV for Project B ? |
| g. What is the IRR for Project A? |
| h. What is the IRR for Project B? |
| i. What is the profitability index for Project A? |
| j. What is the profitability index for Project B? |
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You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 65 years from now. What is the present value of your windfall if the appropriate discount rate is 7 percent?
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Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $537,600 is estimated to result in $179,200 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $78,400. The press also requires an initial investment in spare parts inventory of $22,400, along with an additional $3,360 in inventory for each succeeding year of the project. |
|
If the shop's tax rate is 22 percent and its discount rate is 15
percent, what is the NPV for this project? |
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A Chinese investor bought 50,000 Yuans worth of stock in AMZN when it was selling for $950 and the exchange rate was 1USD = 6CNY. He just sold his shares for $ 1,650 per share and 1USD = 7CNY. What was the total return of the investor? What percentage of the total return was due to change in share price? What percentage of the return was due to change in exchange rate?
Please show work on EXCEL with formulas.
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$5,000 is deposited today into a bank account. The account earns 6.2% per annum compounded half yearly for the first 7 years, then 6.1% per annum compounded quarterly thereafter. Assuming no further deposits or withdrawals are made,
(c) Calculate the account balance 7.5 years from today.
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Suppose that A = D + E and that D/A = 0.68. Solve for A/E.
Suppose that A = D + E and that D/A = 0.24. Solve for D/E.
Suppose that D + E = A, that N/A = .15 and that D/A = 0.72. Solve for N/E.
Suppose that S/A = 8.4 and N/S = .0925. Solve for N/A.
Suppose A – D = E, that N = 21,000, E/A = .75 and N/E = .40. Compute D/A.
Assume that S/A = 5.2, D/A = .15, N/E = .75 and A = D + E. Solve for N/S.
Given that: 2y + 10x + 4 = 28 and 4x – y + 11 = 26, solve for x.
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Thomas Weisel, chief executive of a securities firm that bears his name, believes that individual investors already have too much information. “Many lose money by trading excessively on stray data,” he says. Other industry professionals oppose the SEC’s fair disclosure rule (Regulation FD) for the same reason. The Securities Industry Association’s general counsel expressed concern that the rule restricts rather than encourages the flow of information. Other securities professionals argue that individual investors aren’t really capable of interpreting much of the information now available to them. Explain why you agree or disagree with these opinions.
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Sandhill Inc. has seven-year bonds outstanding that pay a 14 percent coupon rate. Investors buying these bonds today can expect to earn a yield to maturity of 7.250 percent. What is the current value of these bonds? Assume annual coupon payments. (Round answer to 2 decimal places, e.g. 15.25.)
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In: Finance
|
A proposed cost-saving device has an installed cost of $690,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $100,000, the marginal tax rate is 24 percent, and the project discount rate is 10 percent. The device has an estimated Year 5 salvage value of $77,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Pretax cost Savings:
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Present value of an annuity Consider the following case. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
|
Amount of annuity |
Interest rate |
Period (years) |
|
|
$58,000 |
5% |
6 |
a. Calculate the present value of the annuity assuming that it is
1) An ordinary annuity.
(2) An annuity due.
b. Compare your findings in parts a(1) and a(2).
All else being identical, which type of annuitylong dash—ordinary or annuity duelong dash—is preferable? Explain why.
The present value of the ordinary annuity is $_____
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Market Top Investors, Inc., is considering the purchase of a $340,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method, at which time it will be worth $48,000. The computer will replace two office employees whose combined annual salaries are $84,000. The machine will also immediately lower the firm’s required net working capital by $73,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 23 percent. The appropriate discount rate is 10 percent. |
|
Calculate the NPV of this project. |
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Q33:
Knotts, Inc., an all-equity firm, is considering an investment of $1.82 million that will be depreciated according to the straight-line method over its four-year life. The project is expected to generate earnings before taxes and depreciation of $610,000 per year for four years. The investment will not change the risk level of the firm. The company can obtain a four-year, 9 percent loan to finance the project from a local bank. All principal will be repaid in one balloon payment at the end of the fourth year. The bank will charge the firm $60,000 in flotation fees, which will be amortized over the four-year life of the loan. If the company financed the project entirely with equity, the firm’s cost of capital would be 12 percent. The corporate tax rate is 24 percent. Using the adjusted present value method, calculate the APV of the project.
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Please answer both questions
1) Suppose a bank quotes $/€ = 1.1045-1.1506. What is the bid-ask spread in percentage? Do not write any symbol. Express your answers as a percentage. Make sure to round your answers to the nearest 100th decimal points. For example, write 12.34 for 12.34%.
2)Suppose a bank quotes S = $1.1045/€. The annualized risk-free interest rates are 4% and 6% in the U.S and Germany, respectively. Find the approximate forward rate for the euro. Do not write any symbol. Make sure to round your answers to the nearest 100th decimal points. For example, write 1.2345 for $1.2345/€.
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Derek will deposit $2,703.00 per year into an account starting today and ending in year 10.00. The account that earns 5.00%. How much will be in the account 10.0 years from today?
the answer is 38,400.95 but i dont know how to solve it, im still confuse on this, can you please help me
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