Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent.
a. $400 per year for 12 years at 8%
b. $200 per year for 6 years at 4%.
c. $600 per year for 6 years at 0%.
d. Rework parts a, b, and c assuming they are annuities due.
-Future value of $400 per year for 12 years at 8%:
-Future value of $200 per year for 6 years at 4%:
-Future value of $600 per year for 6 years at 0%
In: Finance
A. Please use the the following information for a and b: The current four-year interest rate is 6.25% The current one-year interest rate is 3.0% The expected one-year rate for one year from now is 5.0% The expected one-year rate for two years from now is 6.5% a. Assuming the Expections Hypothesis is correct, what is the expected one-year rate for three years from now? (6 Points) b. Assuming the Liquidity Premium Theory is correct, and, if the expected one year rate is 4.57% three years from now, what is the Liquidity Premium? (6 Points)
In: Economics
Consider a 4-year, 5% annual coupon bond with a face value of $10,000, which was issued three years ago. The bond just paid the coupon. Therefore, this bond has one year to maturity, and the next payment of the face and coupon will be made in exactly one year, after which the bond will cease to exist. If the bond defaults before next year, it will pay total of $8,000 in one year. The effective 1-year risk-free rate is 3.55%. If the bond is currently selling at $9,501.50, compute the risk-neutral probability that the bond will default within one year..
In: Accounting
A company is considering whether to replace
one of its construction equipment.
• The existing equipment has a current cost of $15,000,
which declines by 20% each year for three years. The
operating cost for this equipment is $20,000 for year 1,
$8,000 for year 2, and $12,000 for year 3.
• The proposed equipment will cost $50,000, last five
years, and has a market value that declines by 20%
each year. The operating cost for the proposed
equipment is $5,000 in year 1, increasing by $2,000
each year after that.
Use ESL analysis, with i= 10%, to determine what
the company should do. Solve by hand.
In: Economics
.A machine cost $200,000 and has a salvage value of $100,000 if kept for one year. The salvage value will decrease by $50,000 in years 2 and 3 and remain zero after year 3. The operating costs are $50,000 the first year and increase by $50,000 per year. So operating costs in year two will be $100,000, and in year three $150,000 and so on. How long should the equipment be kept so that annual cost is minimized if the MARR is 10%/year compounded annually or stated another way what is the economic service life (ESL) and what is the associated annual cost for this service life?
In: Economics
1. Your company is analyzing the possible purchase of new equipment at a cost of $150,000. Assume straight-line depreciation and a 3-year depreciable life. It is estimated the equipment would save:$120,000 in Year 1$120,000 in Year 2$120,000 in Year 3$120,000 in Year 4Project operating costs are expected to be $40,000 each year. The firm’s income tax rate is 21 percent, and its required rate of return or cost of capital is 12 percent. Calculate the Net Present Value (NPV) of this project. Should your firm accept or reject the project? Year 4
In: Finance
Mr. Graziano Pellè, the capital budgeting director of Giovinco
Corporation(GC), is evaluating a five-year project, which will
require an initial investment of $98,000 today. The expected
end-of-year cash flows of the project are as follows: Year 1:
$40,000 Year 2: $29,000 Year 3: $30,000 Year 4: $10,000 Year 5:
$11,000 Weighted average cost of capital of this project is 13%,
and both target payback and discounted payback is 4 years.
a. What is the IRR of this project?
b. What is the NPV of this project?
c. What is discounted payback of this project?
d. What is the payback of this project?
In: Finance
Locate the balance sheet of a publicly-traded corporation online in its annual report (10-K) and answer the following questions:
What were the total current assets this year and last year for the company you chose?
What were the total current liabilities this year and last year for the company you chose?
Calculate the Current Ratio for this year and last year for the company you chose.
Analyze your company's current ratio (is it good/bad; how does it compare to the prior year, etc.) Include a link to the URL from which you located the company's annual report
In: Accounting
Dividends Per Share
Seacrest Company has 15,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $20 par common stock. The following amounts were distributed as dividends:
| Year 1 | $22,500 |
| Year 2 | 7,500 |
| Year 3 | 45,000 |
Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.
| Year 1 | Year 2 | Year 3 | |
| Preferred stock (Dividends per share) | $ | $ | $ |
| Common stock (Dividends per share) | $ | $ | $ |
In: Accounting
Dividends Per Share
Sandpiper Company has 30,000 shares of cumulative preferred 2% stock, $100 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends:
| Year 1 | $90,000 |
| Year 2 | 30,000 |
| Year 3 | 180,000 |
Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.
| Year 1 | Year 2 | Year 3 | |
| Preferred stock (Dividends per share) | $ | $ | $ |
| Common stock (Dividends per share) | $ | $ | $ |
In: Accounting