Managers of a firm are planning to invest $180,000.00 in a new four-year long project to implement automation in the packaging department. Considering associated risk of the project, the managers are requiring 11% return from this investment. This project is expected to generate future cash flow of $65,000.00 in each year. Find
please show the steps Clear without using financial calculator.
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In: Finance
g) What is the present value of an ordinary annuity of $1,000 per year for 7 years discounted back to the present at 10 percent? What would be the present value if it were an annuity due?
h) What is the future value of an ordinary annuity of $1,000 per year for 7 years compounded at 10 percent? What would be the future value if it were an annuity due?
i) You have just borrowed $100,000, and you agree to pay it back over the next 25 years in 25 equal end-of-year payments plus 10 percent compound interest on the unpaid balance. What will be the size of these payments?
j) What is the present value of a $1,000 perpetuity discounted back to the present at 8 percent?
k) Muffin Megabucks is considering two different savings plans. The first plan would have her deposit $500 every six months, and she would receive interest at a 7 percent annual rate, compounded semiannually. Under the second plan she would deposit $1,000 every year with a rate of interest of 7.5 percent, compounded annually. The initial deposit with Plan 1 would be made six months from now and, with Plan 2, one year hence.
(a) What is the future (terminal) value of the first plan at the end of 10 years?
(b) What is the future (terminal) value of the second plan at the end of 10 years?
(c) Which plan should Muffin use, assuming that her only concern is with the value of her savings at the end of 10 years?
(d) Would your answer change if the rate of interest on the second plan were 7 percent?
In: Finance
What is the price of a 25-year sovereign bond with a 4.5 per cent yield with annual coupons of 3.5 per cent and a £1,000 face value? How do you define a sovereign bond? Take the above bond in and determine what would be the price of this bond if it paid no coupons? How would you define this type of bond? What would be the benefits for a corporation to issue a bond with no coupons?
In: Finance
.
A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below.
| Cash receipts: | |
| Cash received from customers | $84,560 |
| Cash received from additional investment by owner | 15,100 |
| Cash payments: | |
| Cash paid for expenses | $30,910 |
| Cash paid for land | 62,810 |
| Cash paid for supplies | 370 |
| Drawing | 6,730 |
| Cash balance as of January 1 | $5,000 |
Prepare a statement of cash flows for Linda's Design Services for the year ended December 31. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter amounts that represent cash outflows as negative numbers using a minus sign.
|
Linda’s Design Services |
|
Statement of Cash Flows |
|
1 |
(label) |
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2 |
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3 |
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4 |
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5 |
(label) |
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6 |
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7 |
(label) |
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8 |
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9 |
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10 |
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11 |
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12 |
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13 |
In: Accounting
The quarterly demand for smartphones at a retailer is as show.
|
Year |
Quarter |
Demand |
|
1 |
I |
513 |
|
II |
932 |
|
|
III |
1509 |
|
|
IV |
1902 |
|
|
2 |
I |
693 |
|
II |
1163 |
|
|
III |
1857 |
|
|
IV |
2469 |
|
|
3 |
I |
846 |
|
II |
1439 |
|
|
III |
2271 |
|
|
IV |
3079 |
|
|
4 |
I |
1070 |
|
II |
1751 |
|
|
III |
2785 |
|
|
IV |
3613 |
Forecast the quarterly demand for year 5 using the following models:
In: Statistics and Probability
Midlands Inc. had a bad year in 2019. For the first time in its
history, it operated at a loss. The company’s income statement
showed the following results from selling 79,000 units of product:
net sales $1,580,000; total costs and expenses $1,637,040; and net
loss $57,040. Costs and expenses consisted of the
following.
|
Total |
Variable |
Fixed |
||||
|---|---|---|---|---|---|---|
| Cost of goods sold | $972,000 | $486,000 | $486,000 | |||
| Selling expenses | 517,040 | 90,000 | 427,040 | |||
| Administrative expenses | 148,000 | 56,000 | 92,000 | |||
| $1,637,040 | $632,000 | $1,005,040 |
Management is considering the following independent alternatives
for 2020.
| 1. | Increase unit selling price 25% with no change in costs and expenses. | |
| 2. | Change the compensation of salespersons from fixed annual salaries totaling $203,000 to total salaries of $36,985 plus a 5% commission on net sales. | |
| 3. | Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. |
(a) Compute the break-even point in dollars for
2019. (Round contribution margin ratio to 4 decimal
places e.g. 0.2512 and final answer to 0 decimal places, e.g.
2,510.)
| Break-even point |
$Enter the break-even point in dollars rounded to 0 decimal places |
(b) Compute the break-even point in dollars under
each of the alternative courses of action for 2020.
(Round contribution margin ratio to 3 decimal places
e.g. 0.251 and final answers to 0 decimal places, e.g.
2,510.)
|
Break-even point |
||||
|---|---|---|---|---|
| 1. | Increase selling price |
$Enter a dollar amount |
||
| 2. | Change compensation |
$Enter a dollar amount |
||
| 3. | Purchase machinery |
$Enter a dollar amount |
Which course of action do you recommend? Select an
option
Alternative 1Alternative 2Alternative 3
In: Accounting
Midlands Inc. had a bad year in 2019. For the first time in its
history, it operated at a loss. The company’s income statement
showed the following results from selling 75,000 units of product:
net sales $1,500,000; total costs and expenses $1,750,200; and net
loss $250,200. Costs and expenses consisted of the
following.
|
Total |
Variable |
Fixed |
||||
|---|---|---|---|---|---|---|
| Cost of goods sold | $1,080,000 | $600,000 | $480,000 | |||
| Selling expenses | 520,200 | 95,000 | 425,200 | |||
| Administrative expenses | 150,000 | 55,000 | 95,000 | |||
| $1,750,200 | $750,000 | $1,000,200 |
Management is considering the following independent alternatives
for 2020.
| 1. | Increase unit selling price 25% with no change in costs and expenses. | |
| 2. | Change the compensation of salespersons from fixed annual salaries totaling $198,000 to total salaries of $37,995 plus a 5% commission on net sales. | |
| 3. | Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. |
(a) Compute the break-even point in dollars for
2019. (Round contribution margin ratio to 4 decimal
places e.g. 0.2512 and final answer to 0 decimal places, e.g.
2,510.)
| Break-even point |
$Enter the break-even point in dollars rounded to 0 decimal places |
(b) Compute the break-even point in dollars under
each of the alternative courses of action for 2020.
(Round contribution margin ratio to 3 decimal places
e.g. 0.251 and final answers to 0 decimal places, e.g.
2,510.)
|
Break-even point |
||||
|---|---|---|---|---|
| 1. | Increase selling price |
$Enter a dollar amount |
||
| 2. | Change compensation |
$Enter a dollar amount |
||
| 3. | Purchase machinery |
$Enter a dollar amount |
Which course of action do you recommend? Select an option
Alternative 1Alternative 2Alternative 3
In: Accounting
4) What is the present value of receiving (the sum of) $30,000 next year, $35,000 in two years, and $40,000 in three years if the interest rate is 4%?
In: Finance
You are valuing an investment that will pay you $21,000 per year for the first 9 years, $29,000 per year for the next 12 years, and $68,000 per year the following 16 years (all payments are at the end of each year). Another similar risk investment alternative is an account with a quoted annual interest rate of 13.00% with monthly compounding of interest. What is the value in today's dollars of the set of cash flows you have been offered?
In: Finance
In: Finance