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Get college assignment help at uniessay writers 1 pts What is the NPV of the following set of cash flows if the required return or WACC is 9%? Year Cash Flow 0-$400,000 1 $20,000 2 $400,000 3 $30,000 4 $10,000 $9,287 $14,730 $5,365 O $7,381 $2,646

A loan was made 9 years ago for $357,360 at 6% for a 29 year term. Rates are currently 5%. What is the market value of the loan?

Ms. Madison has an existing loan with payments of $782.34. The interest rate on the loan is 10.5% and the remaining loan term is 10 years. The current balance of the loan is $57,978.99. The home is now worth $120,000 and Ms. Madison would like to borrow an additional $30,000 through a wraparound loan which would increase the debt to 87,978.99. Terms of the wraparound loan are 12.25% interest with monthly payments for 10 years. What is the incremental cost of borrowing the extra $30,000 through a wraparound loan? 13.41% 11.38% 12.96% O 15.47%

Question 1 0/10 Video Submit Excel Online Structured Activity: Bond valuation You are considering a 30-year, $1,000 par value bond. Its coupon rate is 9% , and interest is paid semiannually. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet If you require an effective” annual interest rate (not a nominal rate) of 8.89%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent ….. Check My Work Reset Problem Current soore: Back Next 1561179540000

Dervish Investments has paid a dividend of $3.65 per share. You estimate its required rate 7 of return at 9%. a. What share price would this suggest? (3) b. What would your estimate be if you believe that the company can grow at 2% a year indefinitely? (3) www.euruni.edu 2

Vampire Ventures Ltd has 2,700,000 shares in issue with a price of $3.90 per share. Its return on equity is 12%. The company has $5,000,000 nominal debt outstanding at a coupon rate of 6.5% with four years to maturity. The debt is valued at 97.5%. Corporate taxes are at 32%. Calculate the Weighted Average Cost of Capital (after tax). (6) 6

1 pts Question 9 An investment’s average net income divided by its average salvage value is called its O Internal rate of return O Discounted payback period Average accounting return O This is not defined In the course O Net present value Previous

1 pts Question 13 When NPV-0, we know: O the estimated NPV

Part II For the question from Part I the optimal investment plan was obtained by solving the linear program using MS Excel Solver Microsoft Excel 14.0 Sensitivity Report Variable Cells Objective Allowable Final Reduced Allowable Cell Name Value Coefficient Increase Cost Decrease $B$5 X1 $B$6 X2 0.03 1E 30 563636.36 0.028 1454545.45 0 0.02 0.07 0.0125 $B$7 X3 545454.55 0 0.015 0.0125 0.07 $B$8 X4 800000 0 0.018 1E 30 0.031181818 Constraints Final Constraint Allowable Allowable Shadow Cell Name Value Price R.H. Side Decrease Increase 0 4000000 $B$12 a $B$13 b 3363636.36 1E 30 636363.6364 5.82077E-11 0.011363636 0 600000 1600000 $B$14 c 2000000 0.034290909 2000000 378378.3784 2000000 0 466666.6667 0 0.031181818 0 0.025454545 $B$15 d 800000 $B$16 e 700000 620000 Use the above MS Excel Sensitivity report to answer the following questions. Obtain the optimal value of the objective function Describe the effect if the available steel increases to 300 tonnes (that is, 300 000 kg). Describe the effect if the available copper decreases to 50 tonnes

DIY Ltd. is investing in an extension to one of its factories. The cost of construction now is $50,000, $30,000 will be imvested in equipment in 12 months’ time and a further $8,000 at the end of 2 years. The management accountant estimates that the cash inflows will commence at the end of year 3 and will continue as set out in the following schedule. The residual value of the equipment at the end of year 7 is $10,000 Year 3 5 4 Cash 30,000 30,000 30,000 30,000 20,000 Inflows (S) The cost of borrowing to the company is 12%. required to You are (a) Calculate the Net Present Value of the project and advise the company if it should proceed rate of return on the investment the company should expect and (b) Calculate inter interpret your result. (c) Outline the key characteristics of NPV and IRR as the key methods of evaluation of financial decisions

Get college assignment help at uniessay writers 1 pts Question 1 You are investigating two mutuallyexclusive investment projects for the firm, project A and project B. After your analysis you find that the IRRA IRRs, but that the NPVA NPVe. Given this information you should: O See if you can get a different job because you have no idea what you are doing Choose B because IRR results are not conclusive with mutually exclusive projects O Choose A because NPV results are conclusive with mutually exclusive projects Choose both projects as the results indicate either will work O Choose neither project because of conflicting results

1 pts Question 19 Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20%, ( 2 ) 32 % , ( 3 ) 19.2 %, ( 4 ) 11.52%, ( 5) 11.52%, (6) 5.76 %. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32% In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12 % and the risk-free rate is 5 %. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5 % dividend and sells for $40 per share. What are the depreciation expenses for the machine for years 1 through 6 (do not include taxes here)? o $42,000, 67,200, 40,320, 24,192, 24,192, 12,096 O $34,330,54,440, 33,820, 15,450, 15,450, 78,436 o $40,000,64,000, 38,400, 23,040,23,040, 11,520 o $31332,30,776, 18,928, 18,964, 11,520, 11,520 o $33,333,33,333,33,333, 33,333,33,333,33,333

Consider yourself the CFO of ToughNut Corp. Management is considering whether the company should refund its $720,000, 15.00% coupon, 10-year bond issue that was sold at par 3 years ago. The flotation cost on this issue $3,600 that has been amortizing on a straight-line basis over the 10-year original life of the issue. ToughNut Con has a tax rate of 35%, and current short-term rates are 6%. You have collected the following data about the existing bond and the potential new bond issue: Data Collected Existing Bond New Bond Capital $720,000 $720,000 Flotation cost $3,600 $3,180 Maturity 10 Years since issue 0 Coupon 15.00% 9.00% Call premium 12.00% After-tax cost of new debt 5.85% The associate financial analyst on the finance team has done some preliminary refunding analysis and submitted following calculations to you. Consider this as step 1 in the refunding analysis. Assume that the company pays n additional interest on the old issue and earns no interest on short-term investments. Check if the calculations that the financial analyst submitted are correct and match your analysis. Check each bo that has a correct value. If a value is incorrect, do not check the corresponding box. Step 1: Determining the initial investment outlay Schedule of Cash Flows Before Tax After Tax Check if Correct Investment Outlay Call premium on the old bond -$86,400 -$56,160 X Flotation cost on new issue -$3,180 -$3,180 Immediate tax savings on old flotation cost expense $2,520 $882 Total after-tax investment -$58,458 Based on the information given to you, solve for step 2 (annual flotation cost tax effects) and step 3 (annual interest savings) by completing the following steps in the refunding analysis. Step 2: Calculating the annual flotation cost tax effects 1. For tax purposes, the flotation cost must be amortized over the life of the new bond, which is 8 years. Thus, the after-tax saving every year for the next 8 years will be $139.13 2. ToughNut Corp., however, will no longer receive a tax deduction on the flotation cost on the old issue and will thus lose an after-tax benefit of $126.00 3. The net amortization tax effect on the flotation cost is the difference between the old and the new per year for the next issue, which is $13.13 years. If the company issues new bonds, the tax savings from amortizing the flotation costs will increase Step 3: Calculating the annual interest savings 1. The annual coupon payments on the old bonds were $108,000. Thus, the after-tax interest on the old issue is $70,200.00 2. The after-tax interest on the new bonds is $42,120.00 3. Thus, the net annual interest savings after tax will be $28,080.00 At the final stage of the refunding analysis, you need to calculate the net present values (NPVS) of the savings and costs and the NPV of the entire refunding operation Step 4: Calculating the NPv of the refunding Value Present value of amortized tax effects $82.02 Present value of interest savings $175,410.91 Net investment outlay -$58,458 NPV from refunding $117,034.93

Show 1 pts Question 20 Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20 %, (2) 32%, (3) 19.2%, (4) 11.52 %, (5) 11.52% , ( 6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32 %. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $455 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12 % and the risk-free rate is 5%. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What are the operating cash flows for the machine for years 1 through 6? $47,440,55,504,46,902,41,741,41,741,37,871 o $46,600,54,760, 46,056,40,833,40,833, 36,917 o$41,332,55,776,43,928,40,964, 40,964,36,560 O None of the above. o $33,000 43,300,33,330, 23,400, 23,400, 18,400 1 pts Question 20 Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20 %, (2) 32%, (3) 19.2 %, (4) 11.52 %, (5) 11.52%, ( 6) 5.76 %. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32%. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12 % and the risk-free rate is $%.Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What are the operating cash flows for the machine for years 1 through 6? o $47,440,55,504,46,902.41,741,41741,37,871 e $46.600,54,760,46,056, 40,833,40,833, 36,917 e $41.332,55.776,43,928,40,964,40,964,36,560 None of the above. o $33,000 43,300,33,330, 23,400, 23,400, 18,400

1 pts Question 23 Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20 %, (2) 32%, (3) 19.2%, (4) 11.52%, (5) 11.52%, (6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32 %. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12% and the risk-free rate is 5%. Finally Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What is the cost of preferred capital? O 13.25% O 1375% o 14.75% O 8.75% 0 9.25%

1 pts Question 24 Jake the Dog lInc. is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20 %, (2) 32%, (3) 19.2 %, (4) 11.52 %, (5) 11.52%, (6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32%. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog-dude!!), the expected market return is 12 % and the risk-free rate is 5 %. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5 % dividend and sells for $40 per share. What are the market value weights of each security component of the WACC for Equity, Debt and Preferred Stock? O 453 Equity, 365 Debt,.182 Preferred Answer: O 348 Equity, 438 Debt, .214 Preferred O 428 Equity,.344 Debt, .228 Preferred o 543 Equity,.345 Debt,.112 Preferred O 499 Equity,.301 Debt, 200 Preferred

1 pts Question 25 Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $210,00O. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20%, (2) 32%, (3) 19.2%, (4) 11.52%, (5) 11.52%, (6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32 %.In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he Is a risky dog-dude!!), the expected market return is 12% and the risk-free rate is 5%. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What is Jake’s WACC? 11.35% O 19.58 % O 14.46% o 13.58 % Answer: o 13.77 %

1 pts Question 26 Jake the Dog Inc. Is investing in a new portable iguana killing machine that will cost $210,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IIRS MACRS schedule for the six years is: (1) 20 % , ( 2) 32 % , ( 3) 19.2 % , (4) 11.52% , ( 5) 11.52 %, ( 6 ) 5.76 %. It will generate $50,000 per year of savings for Jake and can be sold for $50,000 at the end of the 6-year period. Jake’s corporate tax rate is 32 %. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $ 1085. Jake also has 80,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.25 (its Jake! he is a risky dog dude!!), the expected market return is 12 % and the risk-free rate is 5 %. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5 % dividend and sells for $40 per share. Using the WACC and the OCF’s what is the NPV of Jake’s iguana killing project (do not forget about the sale of the machine at the end)? o $45,987 O 29,784 O-$15,546 O $11,430 o $13,625

1 pts Question 27 Lion’s Share Inc. just bought a $2.5 million machine that will be depreciated over its 15 year life using straight line depreciation. The marginal tax rate is 30% What is Lion’s Share after tax salvage value if the machine is sold in year 7 for $1.75 million? O $1.855million O $1.600 million o $1.385 million o $1.625 million o $2.155 million

1 pts Question 28 You are considering an investment that costs $300 and produces cash flows over three years of $150, $200 and $300, respectively. If the WACC is 12 % , what is the discounted payback period? O 207 yrs O 2.47 yrs O 2.54 yrs O 2.79 yrs O 2.03 yrs

You are considering two machines, A and B that can be used for the same puroose. Machine A costs $250,000, will reduce costs by $70,000 per year, needs net working capital of $20,000 at time zero which be released at the end of the project, has a 5 year straight line depreciable life and can be sold at the end of the project’s life for $50,000. Machine B costs $320,000, will reduce costs by the same $70,000 per year, has net working capital of $40,000 at time zero (also released at the end of its life), has a ten year straight line depreciable life and can be sold at the end of its life for $60,000. Assume that the tax rate is 38% and the discount rate is 10 %. What are the net present values for these two projects? O $7,045.82 for A and $39,542.1 for B O $3,704.49 for A and $24,333.2 for B $1,787.92 for A and $11,56.09 for B O $2,486.55 for A and $21,421.13 for B

The post Question: 1 Pts What Is The NPV Of The Following Set Of Cash Flows If The Required Return Or WACC Is 9%? Year Cash Flow 0-$400,000 1 $20,000 2 $400,000 3 $30,000 4 $10,000 $9,287 $14,730 $5,365 O $7,381 $2,646 appeared first on uniessay writers.

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November 3, 2019