Each of the three independent investments below has a life of 10 years. The cost of capital for the 3 investments is 14%. The PV of an annuity of P 1 for 10 years at 14% is 5.216. Amount (O) Annual cash inflows (I) Net present value (NPV) Investment A P449,400 P 100,000 ? Investment B ? 70,000 13,800 Investment C 198,208 ? 36,512 The annual cash income for investment C is a. 45,000 b. 161,696 c. 162,906 d. 234,720

Q: Given all else equal, if the yield to maturity of a Treasury bond decreases substantially, generally…

A: The Yield to maturity is the market expected rate of return.  It is an important determinant in bond…

Q: A student needs $6000 every six months to pay living expenses while at college. It will take him 8…

A: Present Value of Ordinary Annuity refers to a concept that determines the value of cash flows at…

Q: Taylor Swift, a college student of USeP decides to get a student loan amounting to $4000 with an…

A: Given, The loan amount is $4000 Rate is 5% compounded monthly Monthly payment is $250

Q: 2. Suppose the Investment Yield on a 182-day T bill is 4%. What is its discount-basis yield?

A: Given, n= 182 days T bill = 4%  Investment Yield = ?  Discount-basis yield= ?

Q: Leveraged Corporation has bonds with a face value of $1,000 at the current price of $1,400. If the…

A: Here, Face value (FV)= $1,000 Current Price (PV) = $1,400 Semiannual Coupon = $60  Time to maturity…

Q: 10. The time value of money concept states that money in the future is worth more than money in the…

A: The given statement is true. Time value of money concept states that the value of money in today's…

Q: 14.Mariah invested $10,000 in a bank certificate of deposit at a rate of 5% interest compounded…

A: Investment (PV) = $10,000 Interest rate (r) = 5% Period (n) = 3 Years

Q: Two mutually exclusive investment projects have the following forecasted cash flows: Year A B 0…

A: The projects or investments are termed to be mutually exclusive when the acceptance given for one…

Q: ge can be constructed for $ 20,000 with a life of 30 years, after which it can be rebuilt at the…

A: In Balancehsheet, capitalised cost is the cost which is incurred today and present value of future…

Q: cashflow diagram.

A: The cash flow statement represents the inflow and outflow of cash from the company in a particular…

Q: hich project should the company pursue? Why?

A: NPV = Present value of cashinflows - Present value of cash outlay.

Q: Net present value f

A: Net present value refers to the difference between the net cash inflows and cash outflows in a…

Q: Q7-6. Is it possible to convert the future value of an ordinary annuity table to the future value of…

A: Answer:- Yes EXPLANATION:- An annuity refers to a stream of equal cash flows that occur at regular…

Q: firmrecently paid a dividend, D0, of $1.25. It expects to have nonconstant growth of 13% for 2 years…

A: Horizon value or continuing value is the present value of all cash flows beyond the explicit…

Q: Quèstion 12 What is the covariance of returns between stocks A and B? Expected retum of A is 30% and…

A: Data given: Expected return of A =30% Expected return of B = 23.333333% Year Return A Return B…

Q: A parcel of land can be leased for a period of 10 years. Initial development costs for clearing,…

A: Initial cost (C) = P 250000 First year revenue (R) = P 22000 Growth rate (g) = 5% n = 10 years r =…

Q: Assume the possible stock prices of Hull Inc. are $150, $155, $160, $165, $170, $175, and $180. The…

A:

Q: Assess One of the companies is a project to build housing units with an estimated investment volume…

A: Payback period is the period in which a project paybacks its initial investment from the expected…

Q: Puckett Products is planning for $5 million in capital expenditures next year. Puckett’s target…

A: A Residual Dividend Policy is a policy in which the earnings of the company are first used for the…

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

A: Cost of equity With current market price (P), next year dividend (D1) and constant growth rate in…

Q: P=P1,000 r= 5% t= 10 years m=4 What would be the future value of the ordinary annuity of the…

A: Given: Particulars Amount Payment(PMT) P1000 Years 10 Rate 5% Compounding 4

Q: Dan is the sole owner of his closely held business and he is considering retiring within the next…

A: Amy will have a stepped-up basis in the property of $1,500,000.

Q: 3. A mortgage balance of $18000 is renewed for the remaining amortization period of 3years at %4…

A: The current value of loan is equal to the present value of all the future monthly installments paid…

Q: Explain whether the following statement is true: “Duress is an unlawful threat of harm or injury…

A: A void contract is a formal agreement that is voidable from the moment it is signed. Although both…

Q: 18. Determine the capitalized cost of a bridge whose cost is P200 Million and its life is 50 years,…

A: Capitalized cost is cost required today the keep and maintain the bridge and also to build so all…

Q: What is the relation between the present value of an investment and time and interest rate?

A: The concept of present value of an investment and time and interest rate is an important concept of…

Q: ou’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 11…

A: We are provided with data of last 5 years in terms of rate of returns.  This is for SkyNet's stock…

Q: When calculating future value, the _____ the interest rate, the smaller the future value amount. a.…

A: Future Value is the value of current amount in the future on a specific date at a specific rate. It…

Q: You are required to: 1. Compute the cost of equity for this project 2. Compute the relevant cost of…

A: Weighted average cost of capital (WACC) refers to the combined cost of company's capital from all…

Q: Determine the simple payback period of a ₱20,000 with return of 5,000 on year 1; 8,000 on year 2 and…

A: Payback period is the period within which initial investment is recovered.    Payback period Formula…

Q: 3. Replacing old equipment at an immediate cost of $120,000 and an additional outlay of $10,000 five…

A: NPV can be calculated by following function in excel =NPV(rate,value1,[value2],…) + Initial…

Q: The method of comparators can be applied using the ratio of operating income to revenue as a basis…

A: Operating Income is an accounting number that measures the amount of operating profit for a company…

Q: When Reserve Bank actions cause interest rates on newly issued bonds to decrease from 6% to 5%, the…

A: There is an inverse relationship between interest rates and bond prices. If the interest rates…

Q: 7) The market price of a bond is equal to: a) The present value of future dividends b) The present…

A: 1) Market price of the bond is the sum of  present value of Interest payment and Principal value of…

Q: What payments must be made at the end of each quarter to an RRSP earning 7.5% compounded annually so…

A: Interest rate  = 7.5% Quarterly interest rate (r) = [1+0.075]1/4-1…

Q: Suppose a Foreign Exchange call option is available on the Euro (€) with a strike price of $1.138.…

A: The Black and Scholes option pricing model: The Black and Scholes option pricing model is considered…

Q: he Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $55,000. It had…

A: Machine purchased 5 years ago = $55,000 Expected life = 10 years Depreciation on machine = $5,500…

Q: 20. Which of the following statement is CORRECT? Assume that the project being considered has normal…

A: The question pertains to the capital budgeting tool of IRR. IRR is the internal rate of return. It…

Q: Company Dividend Yield Price State Street 6.66% $27.09 Use the table above for this question. What…

A: SOLUTION : GIVEN, Dividend Yield = 6.66% Price = $27.09   Now, Calculating the state street's…

Q: Suppose the economy contains two risk factors: the GDP growth rate and the interest rate. Experts…

A: Three factor model to calculate rate of return on a stock Under this model, risk free rate is…

Q: Q4. A project costing $6,200 initially should produce cash inflows of $2,860 per year at the end of…

A: Given: Year Particulars Amount 0 Initial investment -$6,200 1 Cash inflows $2,860 2 Cash…

Q: Question 20 As a currency trader, you see the following quotes on your computer screen Exch. Rate…

A: Solution : Currency Swap is that agreement where two parties exchange the principal amount of loan…

Q: Project X requires an initial outlay of sh.500, 000 and has a profitability index of 1.4. The…

A:

Q: Find r: You have $2,000 in a money market account. If you make no deposits to or withdrawals from…

A: Amount at the end of certain years is calculated as: = Principal (1 + r)^number of years Where 'r'…

Q: It is July 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is…

A: Beta is included to consider the premium for risk. Higher beta reflects a higher level of risk.

Q: 35. A man wishes to bequeath to his daughter P20,000 ten years from now. What amount should he…

A: The present value function can be applied to calculate the investment required today

Q: Assume that a bond will make payments every six months as shown on the following timeline (using…

A: Total number of payments are 40 Coupon payment is $19.89 To calculate : Time to maturity in year…

Q: Mr. Cruz deposited P150,000.00 now, so that his 2 years old daughter will receive 5 equal amounts of…

A: Deposit (P) = P150,000 Interest rate (i) = 12% Period (T) = 15 Years Number of payments (N) = 5

Q: A firm wishes to bid on a contract that is expected to yield the following after-tax net cash flows…

A: Present worth (NPV) will be the difference between total present worth of cash inflows and total…

Q: How much debt does the company now have, to the nearest thousand dollars? How much equity? What is…

A: Weighted average cost of capital (WACC) refers to the joint cost of company's capital from all the…