Year Investment A 2016 $400.000 2017 $400.000 2018 $400.000 2019 $400.000 2020 $400.000 Investment B $100.000 $100.000 $100.000 $1.000.000 $1.000.000 calculate the Npv of both project
Q: How much finance charge will he get credit for if he pays the loan in full immediately?
A: A finance charge is the total cost of borrowing money or getting credit, which includes interest and…
Q: Bond valuation) At the beginning of the year, you bought a $1,000 par value corporate bond with…
A: Coupon = 0.16 * 1,000 = 160Price = Coupon * [ 1-1/(1+ 0.15)^14] / 0.15 + 1,000 / (1 + 0.15)^14= 160…
Q: all annual rate of 0.050 po 13.5% rate of return on Initech shares. What is the Total Payout model…
A: The constant growth model is a stock valuation method used in finance to determine a stock's…
Q: what will your interest or finance charges for the month be?
A:
Q: A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present…
A: For Challenger :EUAC FOR 1 YEAR = $37,500 * (A/P,12%,1) + 11,500 *(A/F,12%,1)EUAC FOR 1 YEAR =…
Q: MIG Tools can either lease or buy some equipment. The lease payments would be $12,800 a year and the…
A: Cash flow statement refers to the statement showing the movement inward and outward of cash during…
Q: In the Marker Motion Simulation, how does spending more on acquisition/expansion yield to customer…
A: Acquisition, in the business context, refers to the process where one company obtains control and…
Q: You will be paying $9,500 a year in tuition expenses at the end of the next two years. Bonds…
A: ABCDECalculation1Time012total2cash flow$9,500$9,500$19,0003present…
Q: A household savings-account spreadsheet shows the following entries for the first day of each month:…
A: Internal rate of return implies the profitability of the projects. This is a capital budgeting…
Q: What is the price of a $25 strike call? Assume S = $23.50, \sigma 0.24, г 0.055, the stock pays a…
A: Using the Black - Scholes formula for the below:S = $23.50K = $25σ = 0.24r = 0.055Continuous…
Q: Kevin deposits $10,000 at the beginning of each year for ten years, into a financial instrument…
A: Annuity refers to a regular stream of cash flows which occurs over a definite period. If it occurs…
Q: What is the value on 1/1/16 of the following cash flows? Use a 10% discount rate, and round your…
A: The PV of an investment refers to the collective worth of the cash flows of the investment assuming…
Q: 4. On a market with an average expected return of 11% the efficient frontier has the followin…
A: Ratio analysis refers to the comparison of two magnitudes or figures of financial statements which…
Q: A stock is currently selling for $39. Over the next two periods, the stock will move up by a factor…
A: A call option refers to the derivative instrument that provides its holder with the choice of…
Q: You are considering either leasing or purchasing a car. You notice an ad that says you can lease the…
A: Use financial calculator Lease with residual value : Annuity due.SET C/Y=12 , P/Y=12
Q: An agent can work for a principal. The agent's effort, a affects current profits, q₁ = a +₁, and…
A: The normal distribution, often referred to as the Gaussian distribution or the bell curve, stands as…
Q: Please follow the following steps to conduct the financial analysis of Pharmamax: 1. Enter the…
A: The objective of this question is to conduct a comprehensive financial analysis of Pharmamax, a…
Q: How much should Colin put into an account today that earns 6.5 percent per year if he wants to be…
A: Net present value (NPV) = Present value of cash inflows - Present value of cash outflows.
Q: Some of the following future cash flows have been expressed in then- current (future) dollars and…
A: Present worth refers to the current value of an asset that will be present at some future date…
Q: A homeowner took out a 30-year fixed-rate mortgage of $120,000. The mortgage was taken out 15 years…
A: Mortgages are a type of loan that can be used to purchase or maintain a home, a plot of land, or any…
Q: Problem 7.11 Calandra Panagakos at CIBC Calandra Panagakos works for CIBC Currency Funds in Toronto.…
A: The objective of the question is to determine whether Calandra should buy a put or a call option on…
Q: 2. Alaskan Motors has outstanding bonds that mature in 14 years and pay $32.50 every 6 months in…
A:
Q: Problem 7.11 Calandra Panagakos at CIBC Calandra Panagakos works for CIBC Currency Funds in Toronto.…
A: The objective of the question is to determine whether Calandra should buy a put or a call option on…
Q: APPLY THE CONCEPTS: Net present value and Present value index Sutherland Corp. is looking to invest…
A: NPV is defined as the sum of the present values of all future cash inflows less the sum of the…
Q: Assume we beleive a 1 factor APT model describes securities returns. Consider 2 assets with the…
A: We need to use the formulae inscribed in portfolio management for arbitrage pricing theory ( APT ).…
Q: A company has a fiscal year-end of December 31: (1) on October 1, $23,000 was paid for a one-year…
A: The objective of the question is to prepare the necessary adjusting entries at December 31 for each…
Q: Stockholders that do not get benefits even if company's earnings grow are classified as
A: Common stockholders: These are the most frequent type of stockholders and have the most significant…
Q: Assume that the economy can experience four possible states: high growth, normal growth, rece those…
A: Investment value = $1,000State of economyProbabilityReturnsHigh growth0.2+20%Normal…
Q: A bond has $94000 face value and the coupon rate of the bond is 3.4 % (APR), The VTM of the bond is…
A: The fair price of a bond is determined by calculating the present value of its future cash flows.…
Q: 3) For the transaction shown below, determine the amount of money in the account at the end of year…
A: Cash flow is a fundamental financial concept that represents the movement of money into and out of a…
Q: You are given the following information concerning three portfolios, the market portfolio, and the…
A: Sharpe ratio= (Rp-Rf) / σpwhereRp = return on portfolioRf = risk free rate =4.2%σp = standard…
Q: Maturity Required: 9/26/2019 12/12/2019 8/13/2020 Days to Maturity Maturity Treasury Bills 9/26/2019…
A: Bid yield is the rate at which the dealer is willing to buy the Treasury billAsk yield is the rate…
Q: You invest $96 in a risky asset and the T-bill. The risky asset has an expected rate of return of…
A: Standard deviation is frequently employed as a risk or volatility indicator. Making educated…
Q: Suppose that the nominal rate of interest is 5% and the expectedrate of inflation is 2%. Whats is…
A: Nominal rate of interest = 5%Inflation rate = 2%Tax rate = 30%Inflation increases by = 2%
Q: 3. The treasurer of a large corporation wants to invest $14 million in excess short-term cash in a…
A: EAR = 6.46%Term of the instrument = 92 days
Q: An engineering firm estimates that its cost for employer sponsored health insurance will be $750,000…
A: Equivalent Annual Cost:It represents the annual cost of operating, owning, and the maintenance of an…
Q: A four-year bond has an 4 percent coupon rate and a face value of $1,000. If the current price of…
A: Time = t = 4 YearsCoupon rate = c = 4%Face Value = fv = $1000Current Price of Bond = pv = $757.01
Q: 3. In a statement of cash flows, a company investing in short-term financial investments and in…
A: The cash flow statement refers to the systematic representation of the cash inflow and outflow…
Q: You have credit card debt of $37,500 that has an APR (monthly compounding) of 15%. Each month you…
A: APR of old card = 15%APR of New Card = 12%Number of months in year = 12(i)Monthly Interest rate of…
Q: A stock has had the following year-end prices and dividends: Year 1 2 3 4 5 6 Price $64.58 71.45…
A: Year Price (a)Dividend (b)Annual return…
Q: perations and are accepting capital commitments. When the funds begin acquiring properties, capital…
A: Fund AYearCapital Committed (A)Capital Invested (B)Fees of A @0.45%Fees of B @0.60%1$506,000,000…
Q: After reviewing the CPI inflation calculator at inflationdata.com, Hanna Lind realized the…
A: Deposit Made = $8800Interest rate = 4%Compounding = QuarterlyNumber of years= 2028-2018 =…
Q: Which one of the following options is the least appropriate way to convince managers to work in the…
A: Receiving a bonus based on company profits, receiving company shares based on increases in share…
Q: Claim against assets are represented by__.I am not satisfy give downvote A. saved earning B.…
A: Claims against assets represent the various commitments and interests that stakeholders hold in a…
Q: Question 1 Company TYK forecasts that it will begin paying dividends seven years from now, at which…
A: Dividend at year 7 (D7) = $1Constant growth rate after year 7 (g) = 6%Discount rate (r) = 10%
Q: state H M L 1. The expected payoff of A is: 2. The standard deviation of A is: 3. If the price of A…
A: Standard deviation is the measure of risk and volatility of the return of the stock and it measures…
Q: Problem 07.037 - MIRR calculation For the net cash flow series, find the external rate of return…
A: The MIRR is an improvement over the traditional Internal Rate of Return (IRR) because it addresses…
Q: Consider a bond, paying 8% semiannual coupons, with face value of US$1,000, maturing in 15 years and…
A: Par Value $ 1,000Coupon rate8.00%Years to maturity15Selling price of bonds$ 724.7
Q: firm 142,000 shares and received net proceeds of $18.56 per share. Hirani & Tran served as the and…
A: Underwriters are intermdediaries that sell the stocks in the market on the behalf of the company and…
Q: On September 14, Jennifer Rick went to Park Bank to borrow $3,600 at 9.25% interest. Jennifer plan…
A:
Step by step
Solved in 4 steps with 10 images
- NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Project B -$430 -$680 1 -528 210 2 -219 210 3 -150 210 4 1,100 210 820 210 6 990 210 7 -325 210 a. Construct NPV profiles for Projects A and B. Select the correct graph. A B D VPVS) 1400- VPVS) I 1400- VPS) 1400- VPVS) 1400- 1200- 1200A 1200- 1200 1000 1000 1000 1000 800- 800 800 800 Project A Project B Project A Project A 600 600 600 600 400 400 400 400 200- Project B Project A Project B - 200 200 200- Project B +.... Cost of cabar so Costof cabiar5 -5 Cost of capita 10 20 25 -5 10 20 25 -5 10 va15 20 25 30 -5 Cost of catal 20 25 30 -200 -200 -200 -200 -400 -400 -400 -4001 The correct graph is -Select- vA firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18The cash flow streams for three alternative investment A, B, C and D are: Project Co Cash Flow (Tk.) C2 Cs C 55000 C3 C4 C6 A 230000 45000 65000 45000 75000 50000 B 290000 45000 90000 35000 95000 65000 55000 C 310000 75000 55000 60000 55000 65000 45000 D 350000 77000 75000 95000 85000 65000 Determine (i) Pay Back Period, (ii) NPV if the required rate of return is 11%, and (ii) IRR for the four alternatives.
- Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 Required A Required B Project A $(183,325) a. For each alternative project compute the net present value. b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Initial Investment $ Chart Values are Based on: i=P % 45,000 58,000 78,295 87,400 60,000 Complete this question by entering your answers in the tabs below. For each alternative project compute the net present value. Project A 183,325 Project B $(143,960)What is the project's MIRR? r = 10.00% 0 Year Cash flows O a. 22.51% O b. 11.75% O c. 17.21% O d. 14.81% O e. 15.65% -$875 1 $300 2 $320 3 $340 $360+ Consider the following three mutually exclusive projects: Cash flow - Project A Year 0 1 2 3 4 5 IRR PV of all positive cash flows - use Excel function NPV NPV Best project using IRR decision rule Best project using NPV decision rule Best project using both decision rules -187 500 25 000 70 000 70 000 70 000 30 000 Cash flow- Project B -45 000 17 000 11 000 17 000 11 000 17 000 Cash flow - Project C -128 000 27 000 37 000 47 000 57 000 31 000 a) Calculate the IRR of each of these projects. Using the IRR decision rule, which project should the company accept? b) If the required rate of return is 13%, calculate the NPV of each of these projects. Which project will the company choose if it applies the NPV decision rule? c) Based on your answers in a) and b) Which project the company will finally choose?
- Consider the following two projects: Projec Year 0 Year 1 Year 2 Year 3 Year 4 Cash Cash Cash Cash Cash Discount Flow Flow Flow Flow Flow Rate A -100 40 50 60 N/A 0.11 -73 30 30 30 30 0.11 The net present value (NPV) of project As closest to Select one: a. 51.2 b. 25.6 O c. 20.5 Od. 22.5Consider the following projects: Cash Flows ($) Co Project D E -11, 100 -21, 100 C₁ 22, 200 34,500 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 11%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y - $20,000 - $20,000 12,630 7,470 5,660 7,470 3 6,360 7,470 4 1,920 7,470 1, 2.
- Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A - 100 40 50 60 N/A 0.13 B - 73 30 30 30 30 0.13 The net present value (NPV) of project B is closest to: O A. 17.9 В. 20.3 C. 40.6 O D. 16.2 O OThe cash flow streams for three alternative investment A, B, C and D are: Project Co 230000 Cash Flow (Tk.) C2 C3 C4 Cs C6 50000 A 55000 45000 65000 45000 75000 В 290000 45000 90000 35000 95000 65000 55000 310000 75000 55000 60000 55000 65000 45000 D 350000 77000 75000 95000 85000 65000 Determine (i) Pay Back Period, (ii) NPV if the required rate of return is 11%, and (ii) IRR for the four alternatives.onsider the following projects: Project Cash Flows ($) C0�0 C1�1 C2�2 C3�3 C4�4 C5�5 A −2,600 2,600 0 0 0 0 B −5,200 2,600 2,600 5,600 2,600 2,600 C −6,500 2,600 2,500 0 2,600 2,600 If the opportunity cost of capital is 10%, which project(s) have a positive NPV? Calculate the payback period for each project. Which project(s) would a firm using the payback rule accept if the cutoff period is three years?