Find the total yield(%) on the initial investment for the given contract (per 1000 ton contract): The expiring Coal one-year forward contract future price = $210.00 per ton. Spot price (at inception) = $200.00. A margin of 5% of the contract’s face value ($210,000) was deposited in form of a T-bill earning 3% for the year. a. 5% b. 98% c. 95% d. -2%

Find the total yield(%) on the initial investment for the given contract (per 1000 ton contract): The expiring Coal one-year forward contract future price = $210.00 per ton. Spot price (at inception) = $200.00. A margin of 5% of the contract’s face value ($210,000) was deposited in form of a T-bill earning 3% for the year. a. 5% b. 98% c. 95% d. -2%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 13PROB

See similar textbooks

Similar questions

What is the equivalent annual cost in years 1 through 7 of a contract that has a first cost of $70,000 in year O and annual costs of $20,000 in years 3 through 7? Use an interest rate of 10% per year. The equivalent annual cost is determined to be $|
Bausch Company is presented with the following two mutually exclusive projects. The required return for both projects is 17 percent. Year 0 1 a. 2 3 4 b. Project M -$145,000 C. 64,000 82,000 73,000 59,000 a. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decim places, e.g., 32.16.) b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Which, if either, of the projects should the company accept? Project N -$360,000 150,000 185,000 135,000 115,000 Project M Project N Project M Project N Accept project % %
A Treasury STRIP is purchased for $942 to mature at $1,000 in 3 years. Assuming annual compounding, what is its yield-to-maturity? Group of answer choices 2.0% 2.5% 3.0% 3.5% 4.0%
6. The price of a 270-day commercial paper is $7,937. If the annualized yield is 5.30%, what will the paper pay at maturity? A. $8,358 B. $7,640 C. $7,538 D. $8,246
Suppose we have an asset currently worth $ 2,000. The current continuously compounded rate is 4% for all maturities. Compute the price of 6 – month forward contract on this asset
1otal Investment in the Project ration : A project requires an investment of 7.20.000 and a scrap value of 20,000 after five years. It is expected to yield profits after depreciation & taxes during five years amounting to 65,000; 25.000: 80.000, 3 70,000 and 90,000. Calculate the average rate of return on the investment. tion:
Period Bid rate. Offer rate 3 month. 2.5%. 2.75% 9 month 3.25%. 3.4% 12 month 3.5%. 3.55% A company enter a project in 3 month for 6 month, the company want to borrow $500, ooo for this period-At the end of this project, the company expect to deposit $600000 on the 9th month untill the end of the year. i. what is the contract rate for borrowing and deposit
HW-Chp-8-1: A company is considering the following projects. If the MARR is 1 % / month/compounded quarterly and 10 years life, which should be selected based on the Rate-of-Return evaluation for multiple alternatives: Project H D 131,000 First Cont Monthly cont annual Income 111.000 6,300 $4.000 5.000 89,000 4,100 4,200 54,800 53,600 $1,900 Income every years 12.500 13,100 11,000 10.200 (a) PW for project A: Q.C. is every (b) PW comparison If they are Independent: Take Project First Cost OC- Income Income every Compare to Equation: PW Take project PW- HW-Chp-8-1-continued.:(b) PW comparison If they are mutually exclusive: Take only Project First Cast O.C Income Income every Compare to Incr.F.C. Inc.O.C. Incr. Income Incr.lac. every Equation: PW- Take project
In 1-year the number of units sold will be revised either upward by 8,700 or downward by 4,300 with equal probability. The initial values are as follows: Net cash flow per unit S71 5,700 No. of units sold Initial investment S1,680,000 Life of project 10 Discount rate 15% Scrape value in year-1 S1,500,000 Find the present value of option to abandon. (A) S18,798 (B) S17.798 (C) SIS.978 (D) S18.978
The spot price of an investment asset is $50. The asset pays sure income of $5 in 6 months and the annual effective risk-free rate is 3%. What is the three-year forward price? a. $46.35 b. $54.63 c. $$49.25 d. $60.02 e. None of the above
Suppose you buy a S10,000 face value T-bill maturing in one month for $9,800, what's your effective annual yield (EAY) for this investment? A. 20% B. 27.43%. OC. 15%. OD. 5.58%
Marissa Manufacturing is presented with the following two mutually exclusive projects. The required return for both projects is 19 percent. Year OHN M & 0 1 2 3 4 Project M -$ 140,000 63,500 81,500 72,500 58,500 Project N -$ 355,000 152,500 180,000 137,500 110,000 a. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. Which, if either, of the projects should the company accept? a. Project M Project N b. Project M Project N c. Accept project % %