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.
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 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 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 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%.
|
In: Finance
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 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 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. 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 |
page 225Based on the payback period, which project should be taken?
Based on the NPV, which project should be taken?
Based on the IRR, which project should be taken?
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 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 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 | $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
In: Finance
HW 12, Problem 1, parts a and b
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 |
In: Finance
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 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