You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $490 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $270 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $192,000 in assets, which will be depreciated on a straight-line basis with a life of 3 years. The actual market value of these assets at the end of year 3 is expected to be $44,000. NWC requirements at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 34 percent and the required return on the project is 10 percent. (Use SL depreciation table) What will the cash flows for this project be for years 0-3?

You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 2.7% (EAR). You keep the bond for 5 years before selling it.

a:What was the price of the bond when you bought it?

b:What is your personal 5-year rate of return if the yield to maturity is still 2.7% when you sell the bond? (i.e. what is your rate of return given what you sold it for at the end of year 5 and what you paid at year-0.)

c:What is your personal 5-year rate of return if the yield to maturity is 4% when you sell the bond? (i.e. what is your rate of return given what you sold it for at the end of year 5 and what you paid at year-0.)

d:What is your personal 5-year rate of return if the yield to maturity is 1% when you sell the bond?

Information: $250 deposit upfront $500 yearly fee for 5 years

1. Assuming an interest rate of 5% per year over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the first year?

2. Assuming an interest rate of 5% per year over a period of 5 years on the money put in the bank, calculate the simple interest and the compound interest earned by A-Design at the end of the fifth year?

3. Assuming an interest rate of 5% per year compounded every 6 months over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the fifth year?

4. Assuming an interest rate of 5% per year compounded monthly over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the fifth year?

4. Assume that the economy of Stockland produces four goods, rocks, socks, blocks, and clocks. Rocks and blocks are both used as weapons; they are good substitutes for each other. The quantities and prices for each of the goods in years one and two are given by the following table:

       YEAR 1                  YEAR 2      
   good quantity price good quantity price      
   rocks       200       $1   rocks   150   $4
   socks       200       $2   socks   220   $5
   blocks   200       $3   blocks   400   $2
   clocks   200       $4   clocks 300    $6

   a. What is nominal GDP in year 1?
   b. What is real GDP in year 1?
   c. What is nominal GDP in year 2?
   d. What is real GDP in year 2? (Use year 1 as the base year.)
   e. What is the percentage increase in nominal GDP? Real GDP?
   f. What is the GDP price deflator?

1.Marilyn operates a day care center as a cash-method sole proprietorship. On August 1st of this year, Marilyn received a prepayment of $4,000 for child care services to be rendered evenly over the next 20 months. How much income must Marilyn recognize this year if she is attempting to minimize her tax burden?

2 .David purchased a deli shop on February 1st of last year and began to operate it as a sole proprietorship. David reports his personal taxes using the cash method over a calendar year, and he wants to use the cash method and fiscal year for his sole proprietorship. He has summarized his receipts and expenses through January 31st of this year as follows:

....... . .... ... .. Receipts . . Expenses
February through December last year $ 112,000 . .    $ 84,500
January this year . . . $10,400 . . $6,200
  

What income should David report from his sole proprietorship?

Slove Lady M Break Even Excel with formulas

a) Suppose that both a call and a put are traded on the stock of ABC Company; both have strike prices of $30 and mature in one-year. What is the payoff to the call option if the stock price is $25 at the end of the year?

b) Suppose that both a call and a put are traded on the stock of ABC Company; both have strike prices of $30 and mature in one-year. What is the payoff to the call option if the stock price is $35 at the end of the year?

c) Suppose that both a call and a put are traded on the stock of ABC Company; both have strike prices of $30 and mature in one-year. What is the profit to the call option if the option premium is $3 and the stock price is $35 at the end of the year?

d) Suppose that both a call and a put are traded on the stock of ABC Company; both have strike prices of $30 and mature in one-year. What is the profit to the put option if the option premium is $4 and the stock price is $35 at the end of the year?

A prospective MBA student earns $60,000 per year in her current job and expects that amount to increase by 11% per year. She is considering leaving her job to attend business school for two years at a cost of $45,000 per year. She has been told that her starting salary after business school is likely to be $75,000 and that amount will increase by 18% per year. Consider a time horizon of 10 years, use a discount rate of 12%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice?

1. The details of estimated project cost, sales and selling price of the product, depreciation and salvage value of a new project are given in the table below. All revenues and costs occur at the end of the period. The income tax rate is 20%. a) Find NPV of the project if the discount rate is 10%. b) The promoters has invested Rs 55 million in Year 1 and Rs 35 million in Year 2. Prepare the cash flow statement (Sources of funds and Disposition of funds). Show all calculations.                                         [5]  

Price, Inc., is considering an investment of $372,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $252,000 and $77,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 5 percent. Price will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $52,000 in nominal terms at that time. The one-time net working capital investment of $13,500 is required immediately and will be recovered at the end of the project. All corporate cash flows are subject to a 34 percent tax rate. What is the project’s total nominal cash flow from assets for each year? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

Cash flow Year 0$ =

Year 1 $ =

Year 2 $ =

Year 3 $ =

Year 4 $ =

Year 5 $ =