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- NPV Calculate the net present value (NPV) for the following 12-year projects. on the acceptability of each. Assume that the firm has a cost of capital of 7%. a. Initial investment is $1,000,000; cash inflows are $ 160,000 per Year b. Initial investment is $2,500,000; cash inflows are $320,000 per Year Using Excel to answer. Show all Formulas1. What are the difference between Direct Method Cash flow withthat of indirect method cash flow, apply them in a given example1. Consider a wine dealer who has k bottles of wine. The dealer can sell them now (t = 0) or can store it for some time and then sell them later. The value of k bottles at t-th month is given by: Vt = ket The dealer can use the sales revenue as principal in a risk-free investment at rate r. (b) Write out the present value PV, of k bottles at t-th month.
- 1- In year 12 Adam earns $1450 and saves $550. In year 21 Adam gets a $4550 raise so that he earns a total of $6000. Out of that $6000, he saves $650. What is Adam's MPC out of his $4550 raise?Investor considers entering a 2Y forward contract (SHORT) for a delivery of 10 shares of company ABC. Current price of one share is 100 EUR. At the end of each year company ABC pays its shareholders 5 EUR of dividend per share. What would be the total result of investor from forward contract/s, if at time of delivery the market price of ABC's shares is 103 EUR per share and he/she entered a contract at theoretical price. Please assume the following countinous compounding 1Y and 2Y zero rates: 8% pa. and 10% pa. respectively. Select one: O i. 327,78 EUR ii. 87,23 EUR iii. 85,03 EUR iv. 121,67 EUR O v. 29,78 EUR O vi. -8,50 EUR vii. -872,35 EUR O viii. -151,67 EUR Oix. 297,78 EUR x. 872,35 EUR xi. -121,67 EUR xii. 151,67 EUR Oxiii. -327,78 EUR Oxiv. 8,50 EUR O xv. -85,03 EUR O xvi. -29,78 EUR O xvii. -297,78 EUR O xviii. none of the answers provided Oxix. -87,23 EURA company invests $6,250 at the beginning ofa seven-year project. At the end of every year forthe first five years, the project generates $1,550. Atthe end of the sixth year, the project generates nomoney. At the end of the seventh year, the project isterminated. How much must the project generate atthe end of the seventh year to realize 14% return onthe initial investment?
- 13.12 You work for Bellevue Window Products. While performing an analysis for a new window prod- uct, you found a report from last year that pro- vided the following information regarding the manufacture of a similar product: annual produc- tion rate T 40,000 units; selling price = $70 per unit; fixed production cost = $240,000 per year; variable production cost = $1,700,000 per year; variable selling expenses = $96,000 per year. As a first-cut, you decide to use this information to estimate (a) the breakeven production rate per year, (b) the company's profit last year, and (c) the annual production rate that would generate a profit of $1,000,000 per year. What are your estimates?A stock now trades for 11 TL per share and distributes 0.16 TL in dividends annually. What is the stock worth to an investor if she anticipates selling it for 14 TL in a year and demands a 10% return on equity investments? a. 12,89%b. 12,73%c. 12,87%d. 10%A stock currently sells for 11 TL per share and pays 0.16 TL per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for 14 TL in one year and requires a 10 % return on equity investments? a. 12,89% b. 12,73% c. 12,87% d. 10%
- A firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflowsare $0.35M indefinitely. If market demand for theproduct is low, then over the next five years thefirm will have the option of discarding the equipment on a secondary market for $2.2M. Assume thatMARR = 12%, s = 50%, and r = 6%. What isthe value of this investment opportunity for the firm?19:14 O E N{ 57% A project requiring an initial investment of $10 000 is guaranteed to produce a return of $13 000 in 5 years. 2. Use NPV method to determine whether this investment is worthwhile if the market rate is 5% compounded annually. ing anial produceatum of o determine wete IIQuestion 12 Not yet answered Pointa eut of 1 F Flag question Suppose you purchase a bond with a coupon of $50 for $1,010. You sell it one year later for $900. What rate of return did you earn? Select one: OA 10.89% O B. 5.94% OC - 10.89% O D. 5.94%