The Zinger Company is considering an $11,000 investment that has the following net cash inflows: Year 1………..$2,000

Year 2………..$2,000

Year 3………..$5,000

Year 4………..$4,000

Year 5………..$4,000

The payback period for this investment is:

a. 3.0 years.

b. 3.5 years.

c. 4.0 years.

d. 4.5 years.

A company has the project costs $50,000 now and $6000 per year for 7 years beginning 1 year from now with increases of 8% per year thereafter for the next 9 years. Calculate a project’s present worth with a real interest rate of 10% per year and an inflation rate of 4% per year.

A contractor was doing the 10-year planning for a construction business, which uses a MARR of 15% per year. The contractor anticipates income of $150,000 per year for years 1-5, and income of $200,000 per year for years 6-10.

1. Draw the cash flow diagram.
2. What is the future value (in year 10) of the income?

1. Suppose you expect dividend in the first year is $6.00 and for the following four years, it’s $10.50 per year. After the fifth year, the dividend will grow at a constant rate of 10 percent per year. The required return is 15 percent. What is the value of the stock today? What is the value of the stock after one year?

Dipper has a 10 year increasing annuity immediate that pays $100 at the end of the first year, $200 at the end of the second year, ... , and $1000 at the end of the 10th year. He exchanges the annuity for a perpetuity of equal value that pays X at the end of each year. If the effective annual interest rate is 3%, find the value of X

Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, dividends are expected to grow at the rate of 7% per year. An appropriate required return for the stock is 12%. Using the multistage DDM, the stock should be worth __________ today.

Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 6.64 percent. The initial outlay is $339,858. Year 1: 163,676 Year 2: 147,656 Year 3: 123,800 Year 4: 178,407 Year 5: 149,077 Round the answer to two decimal places.

The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds​ (1957 replicas). The necessary foundry equipment will cost a total of ​$4,200,000 and will be depreciated using a​ five-year MACRS​ life, LOADING... . The sales manager has an estimate for the sale of the classic Thunderbirds.

The annual sales volume will be as​ follows:

Year​ one:  240

Year​ two:  270

Year​ three:  340

Year​ four:  360

Year​ five:  320

If the sales price is ​$28,000 per​ car, variable costs are ​$18,000 per​ car, and fixed costs are ​$1,200,000 ​annually, what is the annual operating cash flow if the tax rate is 30​%? The equipment is sold for salvage for ​$500,000 at the end of year five. Net working capital increases by ​$600,000 at the beginning of the project​ (year 0) and is reduced back to its original level in the final year. Find the internal rate of return for the project using the incremental cash flows.

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

1. Prepare the current-year income statement for the company using variable costing.

2. Prepare the current-year income statement for the company using absorption costing.