Consider a 4​-year lease for a $ 250000 bottling​ machine, with a residual market value of $ 87500 at the end of 4 years. If the​ risk-free interest rate is 5.4 % APR with monthly​ compounding, compute the monthly lease payment in a perfect market for the following​ leases:

a. A fair market value lease.

b. A $ 1.00 out lease.

c. A fixed price lease with an $ 58000 final price

At the end of its fiscal year, the adjusted trial balance of Carla Vista Company is as follows: CARLA VISTA COMPANY Adjusted Trial Balance July 31, 2017 Debit Credit Cash $4,560 Accounts receivable 11,420 Prepaid rent 500 Supplies750 Debt investments8,000 Equipment19,950 Accumulated depreciation—equipment $5,700 Patents 18,300 Accounts payable 4,275 Interest payable 750 Unearned revenue 2,050 Notes payable (due on July 1, 2019) 45,900 B. Carla Vista, capital 28,285 B. Carla Vista, drawings 16,800 Service revenue74,900 Interest revenue320 Depreciation expense2,850 Interest expense3,000 Rent expense18,550 Salaries expense36,650 Supplies expense20,850 $162,180 $162,180 Make an income statement for the year. Mr. Carla Vista invested $5,000 cash in the business during the year. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) CARLA VISTA COMPANY Income Statement $ $ $ Make a statement of owner's equity for the year. Mr. Carla Vista invested $5,000 cash in the business during the year. (List items that increase owner's equity first.) CARLA VISTA COMPANY Statement of Owner's Equity $ : : $ $ Make a classified balance sheet at July 31, 2017. (List Current Assets in order of liquidity.) CARLA VISTA COMPANY Balance Sheet Assets $ $ : $ Liabilities and Owner's Equity $

If your grandmother’s estate will pay you $280 a year for 7 years, at an interest rate of 6%, what will the present value of these payments?

A firm is considering a $12,000 risky project. The expected cash flows are $3,000 in year 1, $5,000 in year 2, and $7,000 in year 3. The firm's cost of capital is 11%, but the financial manager uses a hurdle rate of 9% for less-risky projects and 13% for riskier projects. Should the firm invest in this riskier project?

No, the NPV is -$578.05

No, the NPV is -$120.85

Yes, the NPV is $578.05

Yes, the NPV is $120.85

Yes, the NPV is $365.98

Personal Budget

At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

c. What are the budget implications for Priscilla Wescott?

Priscilla can see that her present plan   sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $   at the end of December, with no time left to adjust.

Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders.

The company plans to launch a new project three years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 4 years from now).

What is the market value of the company stock? The discount rate is 16 percent.

Select one:

a. $192 million

b. $65 million

c. $121 million

d. $27 million

e. $177 million

Discount Amortization

On the first day of the fiscal year, a company issues a $3,000,000, 11%, five-year bond that pays semiannual interest of $165,000 ($3,000,000 × 11% × ½), receiving cash of $2,889,599.

Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

A 10-year zero coupon bonds was issued with a yield to maturity of 5% You are an investor with a one-year holding period with an ordinary income tax of 40% and capital gain tax of 20%. Assume in one year the interest rate remains the same. Determine:

1. 1. The current price of the bond
2. 2. The price of the bond at the end of the year
3. 3. The after tax holding period return

Domino Corporation is considering a 3-year project with an initial cost of $470,000. The project will not directly produce any sales but will reduce operating costs by $143,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $223,000. The tax rate is 25 percent and the required return is 12 percent. An extra $30,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3? (Hint: remember to recover NWC investment when project ends)

$240,719.50

$264,384.00

$295,764.50

$331,087.30

$376,433.50

In order to estimate the mean 30-year fixed mortgage rate for a home loan in the United States, a random sample of 24 recent loans is taken. The average calculated from this sample is 6.80%. It can be assumed that 30-year fixed mortgage rates are normally distributed with a population standard deviation of 0.5%. Compute 95% and 99% confidence intervals for the population mean 30-year fixed mortgage rate. (Round intermediate calculations to at least 4 decimal places. Round "z" value to 3 decimal places and final answers to 2 decimal places. Enter your answers as percentages, not decimals.)

Confidence Level Confidence to Interval

95%.   ________% to  _______%

99%. ________% to  _______%