Questions
A mining company is deciding whether to open a strip mine, which costs $2.5 million. Cash...

A mining company is deciding whether to open a strip mine, which costs $2.5 million. Cash inflows of $14 million would occur at the end of Year 1. The land must be returned to its natural state at a cost of $12 million, payable at the end of Year 2.

  1. Should the project be accepted if WACC = 10%?
  2. Should the project be accepted if WACC = 20%?
  3. What is the project's MIRR at WACC = 10%? Round your answer to two decimal places. Do not round your intermediate calculations.
  4. What is the project's MIRR at WACC = 20%? Round your answer to two decimal places. Do not round your intermediate calculations.
  5. Does MIRR lead to the same accept/reject decision for this project as the NPV method?
  6. Does the MIRR method always lead to the same accept/reject decision as NPV? (Hint: Consider mutually exclusive projects that differ in size.)

This is all one question, any information will help, thank you in advance!

In: Finance

You own a 15​-year, ​$1,000 par value bond paying 7.5 percent interest annually. The market price...

You own a 15​-year, ​$1,000 par value bond paying 7.5 percent interest annually. The market price of the bond is ​$775​, and your required rate of return is 12 percent.

a. Compute the​ bond's expected rate of return.

b. Determine the value of the bond to​ you, given your required rate of return.

c. Should you sell the bond or continue to own​ it?

In: Finance

St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage...

St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. The new welder will cost $184,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $29,000 to $69,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 40%, and the project cost of capital is 11%. Should the old welder be replaced by the new one? Do not round intermediate calculations. Round your answer to the nearest cent. Negative value, if any, should be indicated by a minus sign. The NPV of the project is $ Old welder be replaced.

In: Finance

Haley’s Crockett Designs Inc. is considering two mutually exclusive projects. Both projects require an initial investment...

Haley’s Crockett Designs Inc. is considering two mutually exclusive projects. Both projects require an initial investment of $8,000 and are typical average-risk projects for the firm. Project A has an expected life of 2 years with after-tax cash inflows of $6,000 and $10,000 at the end of Years 1 and 2, respectively. Project B has an expected life of 4 years with after-tax cash inflows of $4,000 at the end of each of the next 4 years. The firm’s WACC is 12%.
  1. If the projects cannot be repeated, which project should be selected if Haley uses NPV as its criterion for project selection?

    PROJECT (A) OR (B) should be selected.

  2. Assume that the projects can be repeated and that there are no anticipated changes in the cash flows. Use the replacement chain analysis to determine the NPV of the project selected. Do not round intermediate calculations. Round your answer to the nearest cent.

    Since PROJECT (A) OR (B)'s extended NPV = $____________, it should be selected over PROJECT (A) OR (B) with an NPV = $   .

  3. Make the same assumptions as in part b. Using the equivalent annual annuity (EAA) method, what is the EAA of the project selected?

    PROJECT (A) OR (B)

In: Finance

A pension fund manager is considering the following three mutual funds. The first is a stock...

A pension fund manager is considering the following three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.2%. The probability distribution of the risky funds are:

Expected Return Standard Deviation
Stock fund (s) 13% 42%
Bond fund (B) 6% 36%

The correlation between the fund returns is .0222.

Suppose now that your portfolio must yield a return of 12% and be efficient, that is, on the best feasible CAL.

a. What is the standard deviation of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b-1. What is the proportion invested in the T-bill fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b-2. What is the proportion invested in each of the two risky funds? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Proportion invested
Stocks ____%
Bonds ____%

In: Finance

You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price...

You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $850 and your required rate of return is 12 percent.

a. Compute the​ bond's expected rate of return.

b. Determine the value of the bond to​ you, given your required rate of return.

c. Should you sell the bond or continue to own​ it?

In: Finance

The manager of Walmart’s in Arkansas is considering the possibility of providing flower delivery service. She...

The manager of Walmart’s in Arkansas is considering the possibility of providing flower delivery service. She hires you as consultant for this project. You suggested that Walmart should do some marketing research to understand the market needs. Walmart has conducted a survey. The major findings include:  The estimated number of customers is 400.  An average customer is willing to buy $30 worth of flowers per order and pay $5 for delivery.  An average customer tends to place 10 flower orders per year. To ensure on-time delivery Walmart’s needs to invest $30,000 on a new van, which will be straight line depreciated over 10 years with $0 salvage value. The expenses of gas, repair, maintenance, and other operating costs incurred by this van will be $2,000 a year. Staff compensation will cost $50,000 a year. Advertising, promotion and other sales expenses will cost $10,000 a year. The average variable cost of flowers is 60% of the flower sales. There is no variable cost assigned to delivery. (4) Please answer the following questions 1. What is unit contribution (per customer per year)? 2. What is BEV in each year?

In: Finance

Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects for A-Z Motorcars....

  1. Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects for A-Z Motorcars. Assume the discount rate for both projects is 10 percent.

YEAR AZM MINI-SUV AZF FULL-SUV
0 −$650,000 −$975,000
1 370,000 490,000
2 310,000 460,000
3 260,000 410,000
  1. page 225Based on the payback period, which project should be taken?

  2. Based on the NPV, which project should be taken?

  3. Based on the IRR, which project should be taken?

  4. Based on the above analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis.

In: Finance

Please give me the excel formulas for these so i can study them I don't need...

Please give me the excel formulas for these so i can study them

I don't need calculations just the formula and the name of it. maybe a brief sentence.

an investment pays 7710.02 (F51)

at the end of every year for 39 years (F52)

interest rate is 13.17% (F53)

what is this investment worth today?

----

you hope to earn a "ly" (yearly?) income of 701.38 (F59)

interest rate you will earn on yor investments is 14.39% (F60)

You expect to live for 21 years (F61)

How much should you have invested at the beginning of retirement so you achieve your target income and it lasts as long as you live?

-----

You want to know the price of a security

the security makes payments of $887,422.24 (F67)

Once every year for 46 years (F68)

Interest rate is 11.43% (F69)

how much should the security cost?

Thanks so much. I'll upvote

In: Finance

Produce a well-labeled Line chart that illustrates the difference in obtaining fixed annual compound interest rates...

Produce a well-labeled Line chart that illustrates the difference in obtaining fixed annual compound interest rates of 5%, 10%, and 15% on an investment of $100,000 over the course of 10 years. Your chart should show three curves: the value of the investment growing at 5% per year, 10% per year, and 15% per year.

*Must complete in excel

In: Finance

Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets...

Market Value Capital Structure

Suppose the Schoof Company has this book value balance sheet:

Current assets $30,000,000 Current liabilities $20,000,000
Notes payable 10,000,000
Fixed assets 70,000,000 Long-term debt 30,000,000
Common stock (1 million shares) 1,000,000
Retained earnings 39,000,000
Total assets $100,000,000 Total liabilities and equity $100,000,000

The notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 8%, and a 15-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $70 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places.

Short-term debt

$  

%
Long-term debt

    

Common equity

    

Total capital

$  

%

In: Finance

Financial Forecasting Assumptions – Financial forecasting projects a firm’s future financial needs. There are various methods...

Financial Forecasting Assumptions – Financial forecasting projects a firm’s future financial needs. There are various methods used for forecasting. Discuss the various forecasting methods and the assumption that underlie each method.
Requirements:
500 words,

In: Finance

HW 12, Problem 1, parts a and b You are considering an investment in two projects,...

HW 12, Problem 1, parts a and b

  1. You are considering an investment in two projects, A and B. Birth projects will cost $115,000, and the projected cash flows are as follows:

Year

Project A

Project B

1

$7,188

$51,750

2

21,562

38,812

3

40,250

28,750

4

50,315

21,563

5

57,500

14,375

  1. Assuming that the WACC is 9.4%, calculate the payback period, discounted payback period, NPV, PI, IRR and MIRR. If the projects are mutually exclusive, which project should be selected?
  2. Create an NPV profile chart for projects A and What is the exact crossover rate for these two projects?

In: Finance

Suppose you purchase one WM May strike=102 call contract at $5 and write one WM May...

Suppose you purchase one WM May strike=102 call contract at $5 and write one WM May strike=107 call at $2. If the price of WM stock is $105 at expiration, your profit would be _____.

A.

$4.

B.

$400.

C.

zero.

D.

$2.

In: Finance

The three call options issued by Tesla Inc are listed below. Suppose that the current price...

The three call options issued by Tesla Inc are listed below. Suppose that the current price of Tesla is $247.89.

Option

Option price

Strike price

Expiration date

A

$100.20

$150.00

October 25, 2019

B

$2.73

$280.00

November 1, 2019

C

$19.50

$250.00

December 20, 2019

Which option has the highest time value? Discuss the determinants of the time value based on the moneyness and time to expiration.

In: Finance