(Future value)  You are hoping to buy a house in the future and recently received an inheritance of ​$22 comma 000. You intend to use your inheritance as a down payment on your house. a.  If you put your inheritance in an account that earns 9 percent interest compounded​ annually, how many years will it be before your inheritance grows to ​$32 comma 000​? b.  If you let your money grow for 10 years at 9 percent​, how much will you​ have? c.  How long will it take your money to grow to ​$32 comma 000 if you move it into an account that pays 5 percent compounded​ annually? How long will it take your money to grow to ​$32 comma 000 if you move it into an account that pays 13 percent​? d.  What does all this tell you about the relationship among interest​ rates, time, and future​ sums? a.  If you put your inheritance in an account that earns 9 percent interest compounded​ annually, how many years will it be before your inheritance grows to ​$32 comma 000​? nothing years ​ (Round to one decimal​ place.)

Leslie​ Mosallam, who recently sold her​ Porsche, placed ​$9 comma 200 in a savings account paying annual compound interest of 7 percent. a.  Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2​, 6​, and 16 ​year(s). b.  Suppose Leslie moves her money into an account that pays 9 percent or one that pays 11 percent. Rework part ​(a​) using 9 percent and 11 percent. c.  What conclusions can you draw about the relationship between interest​ rates, time, and future sums from the calculations you just​ did? a.  After placing ​$9 comma 200 in a savings account paying annual compound interest of 7 percent​, the amount of money that will accumulate if Leslie leaves the money in the bank for 2 ​year(s) is ​$ nothing. ​(Round to the nearest​ cent.)

HHK Inc. has an asset portfolio that consists of $220 million of 15-year, 7 percent coupon, $1,000 bonds with annual coupon payments that sell at par.

a-1. What will be the bonds’ new prices when market yields change immediately by ± 0.10 percent?
a-2. What will be the new prices if market yields change immediately by ± 2.00 percent?
b-1. The duration of these bonds is 9.7455 years. What are the predicted bond prices in each of the four cases using the duration rule?
b-2. What is the amount of error between the duration prediction and the actual market values?

Consider the case of Newcastle Coal Company:

Newcastle Coal Company is considering a project that requires an investment in new equipment of $4,410,000. Under the new tax law, the equipment is eligible for 100% bonus depreciation at t = 0 so the equipment will be fully depreciated at the time of purchase. Newcastle estimates that its accounts receivable and inventories need to increase by $840,000 to support the new project, some of which is financed by a $336,000 increase in spontaneous liabilities (accounts payable and accruals). The company's tax rate is 25%.

1) The after-tax cost of Newcastle’s new equipment is   

A. $3,307,500

B. $840,000

C.$3,811,500

2) Newcastle’s initial net investment outlay is   .

A. $3,811,500

B. $3,601,500

C. $3,475,500

Suppose Newcastle’s new equipment is expected to sell for $1,200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net operating working capital (NOWC) investment. Remember, that under the new tax law, this equipment was fully depreciated at t = 0. If the firm’s tax rate is 25%, what is the project’s total termination cash flow?

A. $804,000

B. $900,000

C. $1,404,000

D. $1,200,000

Greenpoint Corporation is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 25 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Suppose the appropriate discount rate is 12 percent. Determine the net working capital spending for Year 4 then calculate the NPV of the project. What is the project NPV? Year 0 Year 1 Year 2 Year 3 Year 4 Investment $118,000 Sales revenue $75,000 $75,800 $77,000 $78,500 Operating cost 18,000 18,600 19,600 21,000 Depreciation 29,500 29,500 29,500 29,500 Net working capital spending 10,000 4,000 2,000 1,000 ? $30,532.66 $29,744.78 $28,568.41 $27,520.33 $26,244.80

Pick two publicly traded companies in the same industry and perform ratio analysis on each of the companies for two years. Write a five plus page paper (not including the ratios, and other analysis tools) on which company you would purchase stock as an investment for yourself and why using the financial ratios helped in the analysis. I need in 3 weeks.

Fluor Enterprise is considering a 3-year project with an initial cost of $336,000. The project will not directly produce any sales but will reduce operating costs by $150,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $151,000. The tax rate is 25 percent and the required return is 12 percent. An extra $22,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3? $307,512.63 $299,174.80 $290,413.64 $313,416.76 $382,266.33

Franklin Company is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 12 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $372,000, annual operating costs of $31,600, and a 4-year life. Machine B costs $268,000, has annual operating costs of $39,200, and a 3-year life. The firm currently pays no taxes. Which machine should be purchased and why? Machine A; because it will save the company about $2,875 a year Machine A; because it will save the company about $4,130 a year Machine B; because it will save the company about $3,294 a year Machine B; because it will save the company about $2,795 a year Machine B; because it will save the company about $2,358 a year

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment, and the firm has no excess cash. The firm has total assets of $3 million and net plant and equipment equals $2.6 million. It has notes payable of $155,000, long-term debt of $748,000, and total common equity of $1.5 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.

Write out your answers completely. For example, 25 million should be entered as 25,000,000. Negative values, if any, should be indicated by a minus sign. Round your answers to the nearest dollar, if necessary.

1. What is the company's total debt?

   $  

2. What is the amount of total liabilities and equity that appears on the firm's balance sheet?

   $  

3. What is the balance of current assets on the firm's balance sheet?

   $  

4. What is the balance of current liabilities on the firm's balance sheet?

   $  

5. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm's balance sheet.)

   $  

6. What is the firm's net working capital? If your answer is zero, enter "0".

   $  

7. What is the firm's net operating working capital?

   $  

8. What is the monetary difference between your answers to part f and g?

   $  

   What does this difference indicate?

   Please Explain.

Guthrie Enterprises needs someone to supply it with 215,000 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 $2,700,000 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 $225,000. Your fixed production costs will be $710,000 per year, and your variable production costs should be $9.55 per carton. You also need an initial investment in net working capital of $380,000. If your tax rate is 23 percent and you require a 11 percent return 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.)

A project will produce an operating cash flow of $445,000 a year for four years. The initial cash outlay for equipment will be $1,195,000. The net aftertax salvage value of $61,000 will be received at the end of the project. The project requires 87,000 of net working capital up front that will be fully recovered. What is the net present value of the project if the required rate of return is 12 percent? $146,800.23 $181,219.28 $154,036.37 $172,811.69 $163,677.13

32.

a.

An invoice for the amount of $7910.00 is dated 5/26 and received on 6/16. The terms are 8/10 EOM. Determine the discount amount, if any.

b.

A buyer has established a markup on retail of 31.5% for a line of t-shirts. The buyer plans to price them at $14.00. Determine the price he will have to pay to maintain his plan.

Wildhorse Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 10 percent discount rate for production system projects.

Year System 1 System 2

0 -$14,200 -$44,000

1 14,200 34,400

2 14,200 34,400

3 14,200 34,400

1) Calculate NPV. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round answers to 2 decimal places, e.g. 15.25.)

NPV of System 1 is $_____ and NPV of System 2 is $______.

2) In which system should the firm invest?

The firm should invest in (System 1 or System 2).

You have been provided with the following data about the securities of three firms, the market portfolio, and the risk-free asset:

1. Fill in the missing values in the table. Show your work please.
2. Is the stock of firm A correctly priced according to the CAPM? Firm B? Firm C? If these securities are not correctly priced, what is your investment recommendation for someone with a well-diversified portfolio?