Suppose that a country has no public debt in year 1 but
experiences a budget deficit of $50 billion in year 2, a budget
deficit of $30 billion in year 3, a budget surplus of $10 billion
in year 4, and a budget deficit of $2 billion in year 5.
a. What is the absolute size of its public debt in year
5?
Instructions: Enter your answer as a whole number. For the absolute size of its public debt, enter your answer as a positive number.
b. If its real GDP in year 5 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 5?
Instructions: Round your answer to 2 decimal places.
In: Economics
Perform a Financial Analysis for a project XY.
Assume the projected costs and benefits for this project are spread over five years as follows:
• Estimated costs are $225,000 in Year 1, $50,000 in
Year 2 , 52,500 in Year 3, 55,000 in Year 4 and 57,500 in Year
5
• Estimated benefits are $0 in Year 1 and $182,500 each
year in Years 2, 3, 4 and 5
• Use a 9 percent discount rate, and round the discount
factors to two decimal places.
Create a spreadsheet to calculate and clearly display the following:
• NPV
• ROI
• The year in which payback occurs.
In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis
In: Accounting
Dividend Yield and Dividend Payout
The following information is available for West Texas Waste
Management Inc. (WTWM).
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Dividends per share | $0.02 | $0.04 | $0.08 |
| Earnings per share | 1.07 | 1.28 | 1.41 |
| Market price per share | 16.00 | 19.00 | 21.00 |
Calculate WTWM's dividend payout ratio and dividend yield for Year 1 through Year 3.
Round all answers to one decimal place.
| Dividend Payout |
Dividend Yield |
|
|---|---|---|
| Year 1 | Answer% | Answer% |
| Year 2 | Answer% | Answer% |
| Year 3 | Answer% | Answer% |
Which factor-dividends or earnings-seems to be driving WTWM's share price movement?
Answer
In: Accounting
your company deciding whether to invest in a new machine. The new machine will increase cash flow by $275,000 per year. You believe the technology used in the machine has 10 years of life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine currently priced at $1.8 Million. The cost of the machine will decline by $ 140,000 per year until reaches $1.1 Million. where it will remain. 1) if you required return is 8 percent calculate the NPV today 2) if your required return is 8 percent calculate the following years. year 1. year 2. year 3. year 4. year 5. year 6.
In: Finance
A company is deciding whether to lease or purchase an asset. In this question we will evaluate the NPV of the purchase decision.
The capital cost required to purchase the asset is $1,000,000 (at time zero) with a salvage value of $500,000 at the end of the 5th year. The purchased asset can be depreciated based on MACRS 5-year life depreciation with the half year convention (table A-1 at IRS) over six years (from year 0 to year 5).
The asset would yield annual revenue of $350,000 for five years (from year 1 to year 5) and operating cost of $60,000 for year 1 to 5. If the income tax is 40% and the annual discount rate is 16%, calculate the NPV for the purchase decision
In: Finance
In year 1 the government spends $405 million and collects $356 million in taxes. Public saving in year 1 is equal to $ million and the government debt is equal to $ million.
In year 2 the government spends $390 million and collects $360 million in taxes. Public saving in year 2 is equal to $ million and the government debt is now equal to $ million.
In year 3 the government spends $360 million and collects $358 million in taxes. Public saving in year 3 is equal to $ million and the government debt is now equal to $ million.
In year 4 the government spends $405 million and collects $425 million in taxes. Public saving in year 4 is equal to $ million and the government debt is now equal to $ million.
In: Economics
Following is a list of financial statement items and amounts for Vantage Service as of 12/31/Year 1, the end of its first year in operation.
Accounts Receivable $ 41,300
Accounts Payable 31,300
Cash 10,130
Common Stock 21,300
Notes Payable 10,260
Equipment 50,650
Sales Revenue 106,500
Fuel Expense 10,130
Rent Expense 11,200
Advertising Expense 5,130
Salaries and Wages Expense 21,300
Retained Earnings ?
Dividends 19,520
Required: Prepare the Income Statement for the year ended December 31, Year 1. Prepare the statement of retained earnings for the year ended December 31, Year 1. Prepare the balance sheet for the year ended December 31, Year 1.
In: Accounting
Answer question in Python, show all code:
Write a program that calculates and displays the end of year balances in a savings account if $1,000 is put in the account at 6% interest for five years. For this problem, assume interest is calculated annually. (That is, if I put $1000 in a bank account at the beginning of the year, then the balance at the end of the year is $1,000 + $1,000*6%.) You may assume no money is removed from the account over this period.
Your program output should look like this:
Balance after year 1 is $ 1060.0
Balance after year 2 is $ 1123.6
Balance after year 3 is $ 1191.02
Balance after year 4 is $ 1262.48
Balance after year 5 is $ 1338.23
In: Computer Science
Wizard Inc. has to choose between two mutually exclusive projects. If it chooses project A, Wizard Inc. will have the opportunity to make a similar investment in three years. However, if it chooses project B, it will not have the opportunity to make a second investment. The following table lists the cash flows for these projects. If the firm uses the replacement chain (common life) approach, what will be the difference between the net present value (NPV) of project A and project B, assuming that both projects have a weighted average cost of capital of 14%?
|
Cash Flow |
|||
|---|---|---|---|
| Project A | |||
| Year 0: | –$12,500 | Year 0: | –$40,000 |
| Year 1: | 8,000 | Year 1: | 8,000 |
| Year 2: | 14,000 | Year 2: | 15,000 |
| Year 3: | 13,000 | Year 3: | 14,000 |
| Year 4: | 13,000 | ||
| Year 5: | 12,000 | ||
| Year 6: | 11,000 |
A.) $14,947
B.) $13,286
C.) $10,795
D.) $16,608
E.) $9,965
Wizard Inc. is considering a four-year project that has a weighted average cost of capital of 11% and a NPV of $75,682. Wizard Inc. can replicate this project indefinitely. What is the equivalent annual annuity (EAA) for this project?
A.) $24,394
B.) $26,833
C.) $29,273
D.) $21,955
E.) $20,735
In: Finance
What are the steps to calculate deferred income tax liability? Thanks
The Sample Corporation prepared the following income statements and income tax returns for Year 1 through Year 4.
| Income Statement | Year 1 | Year 2 | Year 3 | Year 4 |
|---|---|---|---|---|
| Sales | $1,000 | $1,000 | $1,000 | $1,000 |
| Operating expenses | 650 | 650 | 650 | 650 |
| Pretax net income | $350 | $350 | $350 | $350 |
| Provisions for income taxes | 140 | 140 | 140 | 140 |
| Net income | $210 | $210 | $210 | $210 |
| Income Tax Return | Year 1 | Year 2 | Year 3 | Year 4 |
|---|---|---|---|---|
| Sales | $1,000 | $1,000 | $1,000 | $1,000 |
| Operating expenses | 900 | 900 | 400 | 400 |
| Taxable income | $100 | $100 | $600 | $600 |
| Income tax payable | 40 | 40 | 240 | 240 |
| After-tax net income | $60 | $60 | $360 | $360 |
Calculate the balance in the company’s deferred income tax liability account at the end of each year.
Assume that the time value of money is 10% per year; calculate
the implicit value of the company’s tax deferral strategy.
Round your answer to the nearest whole number.
In: Accounting