an investment pays 2600 per year for the first 7 years, 5200 per year for the next 7 years and 7800 per year the following 10 years (all payments are at the end of each year). if the discount rate is 12.85% compounding quarterly, what is the fair price of the investment?

]

How much weight do you have to invest in KLM in order to earn the least amount of risk possible, given the following data?

KLM's expected return is 12% and its standard deviation is 50%

FGH's expected return is 10% and its standard deviation is 40%

The two assets have a covariance of 0.1.

NPV AND IRR

A store has 5 years remaining on its lease in a mall. Rent is $2,000 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a "great deal" (owner's words) on a new 5-year lease. The new lease calls for no rent for 9 months, then payments of $2,750 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 1% per month).

1. Should the new lease be accepted? (Hint: Be sure to use 1% per month.)
   
   -Select-YesNoItem 1
2. 
   
3. If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and old leases? (Hint: Find FV of the old lease's original cost at t = 9; then treat this as the PV of a 51-period annuity whose payments represent the rent during months 10 to 60.) Round your answer to the nearest cent. Do not round your intermediate calculations.
   
   $
4. 
   
5. The store owner is not sure of the 12% WACC—it could be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases? (Hint: Calculate the differences between the two payment streams; then find its IRR.) Round your answer to two decimal places. Do not round your intermediate calculations.
   
   %

New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $840,000, and it would cost another $21,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $571,000. The machine would require an increase in net working capital (inventory) of $15,000. The sprayer would not change revenues, but it is expected to save the firm $493,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%. Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.

1. What is the Year-0 net cash flow?

   $ ???

2. What are the net operating cash flows in Years 1, 2, and 3?

   Year 1:	$ ???
   Year 2:	$ ???
   Year 3:	$ ???

3. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)?

   $ ???

4. If the project's cost of capital is 14 %, what is the NPV of the project?

   $ ???

   Should the machine be purchased?

Net present Value: Blanda Incorporated mangement 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. If the firm uses a 9 percent discount rate for their production systems, in which system should the firm invest?

Cash Flows Year System 1 System 2

0 ($15,000) ( $45,000)

1 $15,000 $32,000

2 $15,000 $32,000

3 $15,000 $32,000

Compute the IRR for both production system 1 and production system 2. Which hasa the higher IRR? Which production system has the higher NPV? Explain why the IRR and NPV rankings of systems 1 and 2 are different.

Replacement Analysis

Although the Chen Company's milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $120,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $18,900 per year. It would have zero salvage value at the end of its life. The Project cost of capital is 9%, and its marginal tax rate is 35%. Should Chen buy the new machine? Do not round intermediate calculations. Round your answer to the nearest cent. Negative value, if any, should be indicated by a minus sign.

NPV: $ ??

Should or shouldn't Chen purchase the new machine?

Beginning on March 1, 2013 and ending on June 1, 2016 monthly payments of $100 were deposited into an account which earns 12% compounded monthly. Then, beginning on July 1, 2016 and ending on September 1, 2017 monthly payments of $200 were deposited. Determine the balance of the account on February 1, 2019.

please show work

Problem 12-01 AFN equation Broussard Skateboard's sales are expected to increase by 25% from $9.0 million in 2016 to $11.25 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Round your answer to the nearest dollar. Do not round intermediate calculations. $

You are eyeing an investment in a corporate bond which has a YTM of 5.00%, and a stated rate of interest of 13.00% with a maturity of 1 years. What is the price of this bond?

a. $1,014.29

b. $1,202.38

c. $1,076.19

d. $1,077.10

Step 1: Pick stock you would like to invest in for the long-term (10 or more years)

Step 2: What is the CAGR (compound annual growth rate) for this stock over the past 10 years

Step 3: Does this stock pay dividends? If so, what is the dividend history over the past 10 years

Step 4: Write a paragraph about what this company does, how it makes money, including main products/services/users/etc, and why this is a good investment. Defend your "long" position, both quantitatively and qualitatively.

Please show your work.

Constant Growth Valuation

Woidtke Manufacturing's stock currently sells for $18 a share. The stock just paid a dividend of $1.00 a share (i.e., D₀ = $1.00), and the dividend is expected to grow forever at a constant rate of 5% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent.
$

What is the estimated required rate of return on Woidtke's stock? Do not round intermediate calculations. Round the answer to three decimal places. (Assume the market is in equilibrium with the required return equal to the expected return.)

A T-bond with semi-annual coupons has a coupon rate of 3%, face value of $1,000, and 2 years to maturity. If its yield to maturity is 4%, what is its Macaulay Duration? Answer in years, rounded to three decimal places