3. Amortize a $250,000 (Sale Price) house on a 30 year loan at 4.0% annual interest rate Amortize a $250,000 (Sale Price) house on a 15 year loan at 3.0% annual interest rate (7) What will be the total cost of the 30 year loan? (Total of all Interest & Principle ) (8) What will be the total cost of the 15 year loan? (Total of all Interest & Principle ) (9) At the end of 4 years, how much less will the loan balance of the 15 year mortgage be compared to the 30 year? (10) If you were buying a house at age 30, which loan would you prefer?
In: Finance
In: Accounting
Your company just bought a new piece of equipment to manufacture widgets. It has a cost basis of $275,000, a useful life of 13 years, and no salvage value. If the asset is depreciated using a 150% declining balance with straight line switchover method, answer the following questions:
a) How much does the value depreciate in Year 1?
b) How much does the value depreciate in Year 2?
c) What is the book value at the end of Year 4?
d) How much does the value depreciate in Year 10?
e) In which year does the switchover occur (what is the first year of straight line depreciation)?
In: Economics
4) Harold’s Hotels Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that time, but when it is complete, it should allow the company to enjoy much improved growth in earnings and dividends. Last year, the company paid a dividend of $3.00. It expected zero growth in one year. In years two and three, 2% growth is expected, and in year 4, 6% growth. In year 5 and thereafter, growth should be a constant 4% per year. What is the maximum price per share that an investor who requires a return of 12% should pay for Harold’s Hotel’s common stock?
In: Finance
Your company just bought a new piece of equipment to manufacture widgets. It has a cost basis of $33,000, a useful life of 13 years, and no salvage value. If the asset is depreciated using a 200% declining balance with straight line switchover method, answer the following questions:
a) How much does the value depreciate in Year 1?
b) How much does the value depreciate in Year 2?
c) What is the book value at the end of Year 4?
d) How much does the value depreciate in Year 10?
e) In which year does the switchover occur (what is the first year of straight line depreciation)?
In: Economics
Bill took two W-2’s to his tax preparer to prepare his taxes for the previous year. Both of them were from the same employer. His employer’s accounting period (tax year is July 1 – June 30). All of the following are possible reasons for Bill to have two Forms W-2 except: a) One of the W-2’s is for the wrong year. b) One of the W-2’s was corrected. c) They are duplicate copies. d) Since Bill’s tax year is the calendar year, the employer issued a separate W2 to Bill for each half of the employer’s tax year.
In: Accounting
Exercise
| 1. Graph three plots Sales, Forecast, center moving average | ||||
| 2. Predict the sales in year 5 for each quarter using forecasting | ||||
| Quarter Data for Car Sales | ||||
| Year | Quarter | Sales (1000's) | Moving average (4) | Center moving average (baseline) |
| year 1 | 1 | 4.8 | ||
| 2 | 4.1 | |||
| 3 | 6 | |||
| 4 | 6.5 | |||
| Year 2 | 1 | 5.8 | ||
| 2 | 5.2 | |||
| 3 | 6.8 | |||
| 4 | 7.4 | |||
| Year 3 | 1 | 6 | ||
| 2 | 5.6 | |||
| 3 | 7.5 | |||
| 4 | 7.8 | |||
| Year 4 | 1 | 6.3 | ||
| 2 | 5.9 | |||
| 3 | 8 | |||
| 4 | 8.4 | |||
In: Statistics and Probability
A five-year project, if undertaken, will require an initial investment of $95,000. The expected cash flows are:
Year 1: $12,000
Year 2: $39,000
Year 3: $39,000
Year 4: $30,000
Year 5: $18,000
If the appropriate discount rate for this project is 15 percent, what is the value of this project today?
Relevant time for $12,000:?
Relevant time for $39,000:?
Relevant time for second $39,000:?
Relevant time for $30,000:?
Relevant time for $18,000:?
Relevant rate:?
Value of $12,000:?
Value of $39,000:?
Value of second $39,000:?
Value of $30,000:?
Value of $18,000:?
Total value:?
Compared to the initial investment, should this project be undertaken?
In: Finance
Suppose the fixed basket of goods used to calculate the CPI consists of 4 units of good A, 3 units of good B, and 2 units of good C. From year 1 to year 2 the prices of the goods changed as shown in the table. Year 1 is the base year. Price in year 1 Price in year 2 Good A $2.20 $2.53 Good B $3.40 $3.74 Good C $5.60 $5.88 The price of good A changed by %, the price of good B changed by %, and the price of good C changed by %. The overall inflation rate was %. Enter numbers rounded to the nearest whole number.
Help please!
In: Economics
|
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset qualifies for 100 percent bonus depreciation in the first year. The project is estimated to generate $1,810,000 in annual sales, with costs of $700,000. The project requires an initial investment in net working capital of $450,000, and the fixed asset will have a market value of $480,000 at the end of the project. |
| a. |
If the tax rate is 25 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? |
| b. | If the required return is 12 percent, what is the project's NPV? |
In: Finance