Get college assignment help at uniessay writers Project S costs $13,000 and its expected cash flows would be $7,000 per year for 5 years. Mutually exclusive Project L costs $36,500 and its expected cash flows would be $11,700 per year for 5 years. If both projects have a WACC of 15%, which project would you recommend? Select the correct answer. a. Project S, since the NPVS > NPVL. b. Neither Project S nor L, since each project’s NPV 0. d. Project L, since the NPV > NPV5. e. Both Projects S and L, since both projects have NPV’s> 0.
8. Anna owns the stock of Company A, which is currently selling at $100. She wants to protect herself against seil io proieci herself? Draw the payoff of the option and the payoff to Anna in case she decided to own both the stock and the option. (10 points) drop of the stock price below $80. What type of option should she buy or a
2. You are ready to buy a car and you have $2,000 for a down payment and closing costs. Closing costs are estimated to be $500. The interest rate on the loan is 7 % per year with semiannual compounding for a 4-year fixed rate loan. The car costs $20,000. What is the semiannual payment on the loan? Fill in the entries in the schedule for the first 3 semmiannual payments. What will the loan balance be after the 5th payment? (10 points) Semminannual Interest paid Principal Reduction Loan Balance 23
Is it possible for a project to make an accounting loss but to add value to the company? Explain the reasons for your answer. (5) 8 Diana’s Al Natural Herbal drink is expected to be a hit with summer music festival goers order to get ready for this summer’s festival season, she needs to invest $250,000 in manufacturing equipment which will cost $10,000 to install. This will be depreciated over 10 years straight line to a zero terminal value. She forecasts an annual EBIT increase of $70,000 a year from this new product although she will have to increase receivables by $12,000 whilst payables will rise from $12,000 to $17,000. In order to stockpile product for the summer she will have to bear an inventory increase of $30,000. She discounts cash flows at 10% and pays tax at 28 %. Calculate: a. The capital cash outflow for this project. b. The Annual Incremental cash flows for years 1-9 c. The terminal incremental cash flow. d. Should she go ahead with the project – give reasons and/ or show calculations. (15 total)
Q1. Invest $15,000 in age of 35 into a saving fund. If the fund offers 7.95% nominal interest rate of return, your investment is worth how much at age 65? Q2. The total saved amount in part d above, could be made by saving monthly to a similar bank account paying only 7.25%. How much I should put every month age 35 to 65? Q 3. Alternatives are being considered for improving an operation on the assembly line along with the “keep existing” alternative. Consider equipment costs, as the annual benefits of each in comparison to the present situation. Each of Plans A, B, and C has a 11-year life and a scrap value equal to 10% original costs. Hint: Keep existing alternative will have a PW= $0.0 All costs and savings in $ Additional Equipment cost Additional Annual saving A C 14000 15000 25000 33000 13500 8000 benefits Additional Operating costs/ 8000 4000 4400 year Additional Salvage value % 10% 10% 10% 1. Draw appropriate cash flow diagram 2. Complete the Present Worth Analysis to make an economical decision 3. Keep Existing option will be alternative “D”. calculate PW 4. State the decision making criteria used for the selection
90 80 You have $1 million to invest and have the following projects to choose from. Which do you invest in if your cost of capital is 10%? What other factors may affect your decision? (20) Project/ Time A B D -400,000 -100,000 200,000 600,000 300,000 600,000 -400,000 120,000 120,000 120,000 120,000 -500,000 1 200,000 300,000 200,000 2 1,000,000 3 400,000 100,000 4
Assume that you want to determine which of the following proposals will result in the lowest total cost of acquisition Offeror A proposes to lease the asset for three years. The annual lease payments are $10,000 per year. The first payment will be due at the beginning of the lease, the remaining two payments are due at the beginning of Years 2 and 3 Offeror B proposes to sell the asset for $29,000. It has a three-year useful life. At the end of the three-year period, it will have a $2,000 salvage value. Step 1: Select the discount rate. The term of the lease analysis is three years, so nominal discount rate for three years, 1.6% we will use the Steps 2 and 3: Identify and establish the timing of the costs/benefits to be considered in analysis. The expenditures and receipts associated with the two offers and their timing are delineated in the table below, in which parentheses indicate a cash outflow: OFFER EXPENDITURES/RECEIPTS Offer A Offer B t 0 (S10,000) (S29,000) 1 (S10,000) 0 2 (S10,000) 0 3 $2,000 Read the scenario below and answer the questions that follow Scenario: You get two proposals. Contractor A proposes to lease the asset for $1,200 a year for three years. The first payment is due at contract signing, with subsequent payments due upon each annual option exercise. Contractor B proposes to lease the asset for $1,200 a year for three years, with 36 monthly payments. The first payment is due at contract award, with sequential monthly payments afterward. The scenario is depicted in the figure below. Contractor A is paid $1,200 1 year after Contractor A’ is paid $1,200 upon contract award Contractor ‘A’ is paid $1,200 2 years after contract award contract award Contract signed First option exercised Second option exercised Second option exercised 78 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2 : 2 3 456 29 30 31 32 33 34 35 36 Month 1 Contractor is paid $100 at the beginning of each month, beginning at contract award OFFEROR A Cash Flow Timeframe Discount Rate Discount Factor PV (t) (i) (CFXDF) N/A N/A N/A Net Present Value: OFFEROR B Cash Flow Timeframe Discount Rate Discount Factor PV (t) (i) (CFXDF) N/A N/A N/A Net Present Value:
what strengthens the likelihood of a behavior happening again through the removal or reduction of an aversive stimulus? a.) punishment b.) negative reinforcer c.) primary reinforcer d.) shaping
Rovision 1.odf-Adobe Acrobat Reader DC File Edit View Window Help Home Tools Revision 1 pof 1 QUESTION David just won $20,000 from OZ Lottery. He does not market with two phases. In the second phase compounding quarterly spend all the money and decided to inve et that pays 7% interest, comp securitles the first 5 years, he invest the amou f eitht years, he continue to invest the accumulated income in another asset with interest rate of 8% Required: 1) Compute the effective annual interest rate (EAR) you got in the last eight years? 2) How much money he will have after 13 years? 3) After 5 years. how long will he have to wait more until his winnings are worth $40.000 if the rate 8% is compounding annually? Revision 1pdf Ad Final am revision O Type here to search
Get college assignment help at uniessay writers The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. The IRR for Altemative A is most nearly equal to what value? D S30,000 A C E S55,000 $90,000 Capital investment $70,000 S37,000 17.000 s0 пло 52 000 за поо 45 000 15,000 Market value at EOY 10 10,000 11,000 10,000 15,000 IRR 222 7 4% 36.6% 39.0% 9.2% Choose the correct answer below. 43 23 ос. 33 D. 18 ОЕ. ЗВ
Question 3 You borrowed $1000 from a friend with an agreement to pay interest at an annual rate of 18%, compounding dailv. If you repaid your friend after 90 days, how much would you need to repay?
Brandon is an analyst at a wealth management firm. One of his clients holds a $10,000 portfolio that consists of four stocks. The investment allocation in the portfolio a long with the contribution of risk from each stock is given in the following table: Standard Investment Deviation Beta Stock Allocation 23.00% Atteric Inc. (AI) 35% 0.750 Arthur Trust Inc. (AT) 27.00% 20% 1.400 30.00% Li Corp. (LC) 1.100 15% 34.00% Baque Co. (BC) 30% 0.400 Brandon calculated the portfolio’s beta as 0.828 and the portfolio’s expected return as 8.55%. Brandon thinks it will be a good idea to reallocate the funds in his client’s portfolio. He recommends replacing Atteric Inc.’s shares with the same amount in additional shares of Baque Co. The risk-free rate is 4%, and the market risk premium is 5.50%. According to Brandon’s recommendation, assuming that the market is in equilibrium, how much will the portfolio’s required return change? O 0.52 percentage points O 0.77 percentage points O 0.83 percentage points O 0.67 percentage points Analysts’ estimates on expected returns from equity investments are based on several factors. These estimations also often include subjective and judgmental factors, because different analysts interpret data in different ways. Suppose, based on the earnings consensus of stock analysts, Brandon expects a return of 6.38% from the portfolio with the new weights. Does he think that the revised portfolio, based on the changes he recommended, is undervalued, overvalued, or fairly valued? O Undervalued O Fairly valued O Overvalued According to Brandon’s recommendation, assuming that the market is in equilibrium, how much will the portfollc required return.change? 0.52 percentage points 0.77 percentage points 0.83 percentage points 0.67 percentage points Analysts’ estimates on expected returns from equity investments are based on several factors. These estimations also often include subjective and judgmental factors, because different analysts interpret data in different ways. Suppose, based on the earnings consensus of stock analysts, Brandon expects a return of 6.38 % from the portfoli with the new weights. Does he think that the revised portfolio, based on the changes he recommended, is undervalued, overvalued, or fairly valued? O Undervalued O Fairly valued Overvalued Suppose instead of replacing Atteric Inc.’s stock with Baque Co.’s stock, Brandon considerss replacing Atteric Inc.’s stock with the equal dollar allocation to shares of Company X’s stock that has a higher beta than Atteric Inc. If everything else remains constant, the portfolio’s beta would
$290 $290 $290 $290 $290 i. 4 5 1 2 3 End of Year $1,000 $290 $290 $290 $290 $290 4 7 8 End of Year $1,000 $1,740 $1,740 $1,740 $1,740 $1,740 4 iii. 6 7 End of Year $6,000 LO O- .- ulate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for (i) and EOY four for (ii) and (ii) as the reference points in time. What can you conclude about “reference year shift” and “proportionality” issues of the IRR method? b. Calculate the PW at MARR12 % per year at EOY zero for (i and (ii) and EOY four for (ii) and (iii. How do the IRR and PW methods compare? L Click the icon to view the cash-flow diagrams. i More Info Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. IRR for (i) 14 % IRR for (ii)14% IRR for (ii) 14 % $200 $0 1 4 One can conclude that there is some End of Year special”reference year shift” and “proportionality” issues of the IRR method 1,000 b. Calculate the PW at MARR 12 % per year. (Round to the nearest cent.) PW(12% ) PW12 % ) -$ EΟΥ 0 7 8 5 6 ΕΟΥ 0 End c Year PW12%) $ PW 12% ) $ 51.000 EOY 4 ΕΟΥ. Q $1,740 $1240 $140 1740 $1,340 How do the IRR and PW methods compare? Choose the correct answor below 6 7 If PW(i MARR)20 and IRR< MARR, the project is economically justified B. If PW(i MARR)20 and IRR MARR, the project is economically justified. c. If PWi MARR)<0 and IRR< MARR, the project is economically justified. End of Year s.00 D. If PW(i MARR) 0 and IRR 2 MARR, the project is economically justified. Prim Done Click to select your answer(s) Discrete Compounding; i=12% Single Payment Uniform Series Compound Compound Sinking Capital Recovery Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor Factor To Find A To Find F To Find F To Find P To Find P To Find A Given P Given P Given F Given A Given A Given F FIA F/P P/F P/A A/F A/P 1 0.8929 0.8929 1.0000 1.1200 1.0000 1.1200 1.2544 1.6901 2 0.7972 2.1200 0.4717 0.5917 3 1.4049 0.7118 3.3744 2.4018 0.2963 0.4163 0.6355 0.2092 4 1.5735 4.7793 3.0373 0.3292 1.7623 0.5674 5 6.3528 3.6048 0.1574 0.2774 0.5066 0.2432 1.9738 8.1152 4.1114 0.1232 7 2.2107 0.4523 10.0890 4.5638 0.0991 0.2191 4.9676 2.4760 0.4039 12.2997 0.0813 0.2013 2.7731 0.3606 14.7757 5.3282 0.0677 0.1877 0.3220 10 3.1058 17.5487 5.6502 0.0570 0.1770
OFFICE PREP PAINT 3 1 2 FINISH PACK BREAK ROOM 6 4 Dis tance in et Between Departments Weekly Movement of Units 1 2 4 5 6 1 2 3 4 5 6 1 10 20 10 20 30 1 0 0 0 0 2 10 20 10 20 200 200 200 200 3 30 20 10 3 200 0 20 200 4 10 4 0 5 10 5 0 6 6 lolololo
Assignment 5-Options Contract Consider the following situation: On year ago, an investor bought 1,000 shares of XYZ Stock at $60 per share. The stock is currently (June 20, 2019) trading at $80. On the one hand the investor doesn’t want to lose his accounting profit ($20per share), on the other hand he is expecting raising sock prices in between the next six months. Therefore, the investor decides to buy a put option on XYZ Stock with a striking price of $80 and a time to expiration of six months. The premium of the put is $3 per XYZ Stock Answer the following questions: a) Determine the profit and loss function of this hedge strategy (long stock and long put) at expiration depending on the then prevailing price of XYZ Stock, S, b) Which profit respectively loss will the investor realize if XYZ Stock takes on the values Sp$58; $80; $92} at expiration? c) Determine the maximum profit, maximum loss and the break-even-point of this hedge strategy. d) Depict the profit and loss diagram of this hedge strategy
What kind of clothing did the Toltecs wear?
0.5 pts Question 10 Emily is buying a new table for $1500. The dealer is charging her an annual interest rate of 6 % If she makes a down payment of $200, how much will her monthly payments be?
Heaven Scent has made a bid to buy Perfect Fumes and needs to raise $2 billion of new equity. The market price of Heaven Scent is $57/sh. The Bank decides to raise additional funds via a 13 for 23 rights offer at $37 per share. If we assume 100% subscription, what is the value of each right? (6)
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 2 3 4 5 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$400 $132 $132 $132 $132 $132 $132 a. What is each project’s NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A 162.48 Project B$ 127.68 b. What is each project’s IRR? Round your answer to two decimal places. Project A 18.10 Project B 23.86 c. What is each project’s MIRR? (Hint: Consider Period 7 as the end of Project B’s life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A 11.79 Project B 12.06 d. From your answers to parts a-c, which project would be selected? Project A If the WACC was 18%, which project would be selected? Project B e. Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. NPV Project A NPV Project B Discount Rate 0% 5 10 12 15 18.1 23.86 f. Calculate the crossover rate where the two projects’ NPVS are equal. Round your answer to two decimal places. Do not round your intermediate calculations 14.66 q. What is each project’s MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. 12.77 Project A Project B 12.06 * *
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and the second is a 95% loan for 25 years at 9.25% interest. ASsuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money? 18.75% 14.34% 13.50% 12.01%
The post Question: Project S Costs $13,000 And Its Expected Cash Flows Would Be $7,000 Per Year For 5 Years. Mutually Exclusive Project L Costs $36,500 And Its Expected Cash Flows Would Be $11,700 Per Year For 5 Years. If Both Projects Have A WACC Of 15%, Which Project Would You Recommend? Select The Correct Answer. A. Project S, Since The NPVS > NPVL. B. Neither Project … appeared first on uniessay writers.