In: Finance
You are considering to borrow Rs 100,000 from SBI for a period of one year and have the following options to choose from: Option A: SBI offering interest rate of 10% p.a. Option B: HDFC Bank is offering to give guarantee to SBI on your behalf subject to your paying a fee of 1% flat. Based on this guarantee, SBI is willing to reduce the interest rate to 9.5% p.a. Which option will you choose? Select one:
a. Option B
b. Option A
c. Both options are equally attractive
In: Finance
You are set to receive an annual payment of 1330$ per year for ever. Assume the interest rate is 15%. What is the future value of this amount?
a) 1156.52
b)1130.50
c)1564.71
d)1529.50
In: Finance
After paying a dividend of $1.90 last year, a company does not expect to pay a dividend for the next year. After that it plans to pay a dividend of 6.66 in year 2 and then increase the dividend at a rate of 4 percent per annum in years 3 to 6. What is the expected dividend to be paid in year 4? (to nearest cent; don't include $ sign)
In: Finance
A company is forecasted to generate free cash flows of $21 million next year and $24 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 8.1%. The company has $48 million in debt, $17 million of cash, and 28 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 14, what's your estimate of the company's stock price?
a. 30.8
b. 26.8
c. 14.9
d. 10.6
e. 18.0
In: Finance
A 2n-year annuity has deposits of X made at the end of each of the first n years and deposits of 2X made at the end of each of the next n years. The accumulated value of this annuity at the end of 2n years is 6000. Suppose that the annual effective rate of interest is i, where i > 0. You are given X i = 1500. Find the present value of this annuity at time t = 0.
In: Finance
A bond has a 15-year maturity, a 7.25% semiannual coupon, and a par = $1,000. The yield to maturity (rd) is 6.20%, and semiannual compounding. What is the bond’s price?
a. $1,047.91
b. $1,074.50
c. $1,101.58
d. $1,129.21
In: Finance
A project has an initial capital investment of $420,000, and a four-year life, at the end of which it will be fully depreciated to zero. The forecasted incremental net income after tax from the project is $14,200, $18,600, $16,300, and $20,000, respectively, for each of the next four years. What is the average accounting return (AAR) for this project?
In: Finance
Your firm is considering a project with a four-year life and an
initial cost of $87,000. The discount rate for the project is 15
percent. The firm expects to sell 1,800 units a year. The cash flow
per unit is $19. The firm will have the option to abandon this
project after two years at which time they expect they could sell
the project for $40,000. At what level of sales should the firm be
willing to abandon this project?
A. 1,295 units
B. 1,361 units
C. 1,540 units
D. 1,565 units
In: Finance
An $8000 loan is to be amortized with equal monthly payments over a 2 year
period at j (12) = 8 %. Find the outstanding principal after 7 months and split the
8 th payment into principal and interest portions.
outstanding principal after 7 months is?
the principal in the 8 th payment is?
the interest in the 8 th payment is?
In: Finance