1.) Cannon Company is considering a capital project that will return $100,000 each year for five years. At the company's hurdle rate of 10%, the present value of the annuity is $379,100. If the return on investment in the first year is $37,910, what is the return of investment that year? (a) $137,910 (b) $100,000 (c) $62,09
On December 30, 2004, Cey, Inc. purchased a machine from Frank Corp. in exchange for a noninterest-bearing note requiring eight payments of $40,000. The first payment was made on December 30, 2004, and the others are due annually on December 30. At date of issuance, the prevailing rate of interest for this type of note was 11%.
On January 15, 2004, Grant Corp. adopted a plan to accumulate funds for environmental improvements beginning July 1, 2008, at an estimated cost of $2,500,000. Grant plans to make four equal annual deposits in a fund that will earn interest at 10% compounded annually. The first deposit was made on July 1, 2004. Future value facto
Ms. Amidala Inflamada is celebrating today her birthday and 15th anniversary as the Executive Secretary for Mr. Num Bei Wan, President of Last Chance, Inc. During the day she was talking to her closest friends how turbulent where the first days she came in to work after her graduation from the University when she was only 22 ye
1. Growth Rates: - XYZ Corporation's 2005 sales were $12 million. Its 2000 sales were $6 million, a. At what rate have sales been growing? b. If someone made the statement: "Sales doubled in 5 years. This represents a growth of 100 percent in 5 years, so, dividing 100 percent by 5, we find the growth rate to be 20 percent pe
A single person who has a high level of earnings and paid social security taxes throughout her life expects to retire at age 65 and receive $10,000 per year until she dies. Assume the person lives to age 80 and use a discount rate (10%) to find the present value of the benefit received by person when he retires.
Kim and Dan Bergholt are both government workers. They are considering purchasing a home in the Washington D.C. area for about $280,000. They estimate monthly expenses for utilities at $220, maintenance at $100, property taxes at $380, and home insurance payments at $50. Their only debt consists of car loans requiring a monthly
Commencing with the next year, he subsequently deposits $250 every 3 months at the end of the period, for the next 9 years. What is the value of the annuity at maturity?
Sam deposited $1,000 dollars today in a fixed-rate, tax-deferred annuity, which guarantees an 8% return with quarterly compounding. Commencing with the next year, he subsequently deposits $250 every 3 months at the end of the period, for the next 9 years. What is the value of the annuity at maturity? a. $10,720 b. $12,99
Mrs. S has 4 grandchildren, the oldest will enter college in 10 years. she wants to help pay for their college educations by giving each child $15,000 @ the beginning of each school year for each of the 4 years required to finish college. Toward that end, she just sold a small house she had owned for $40,000 & has invested the p
My company wishes to accumulate 1,300,000 by Dec.31, 2017, to retire bonds outstanding. We deposit 300,000 on Dec.31, 2007 which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, I would like to know how much should be deposited at the end of each quarter for 10 yrs. to ensure t
Finance PV FV: Kyle corporation Repeat parts (a), (b), and (c) assuming that the corporate tax rate is 38 percent. Are the break-even levels of EBIT different from before? Why or why not?
Ch. 5 4) Calculating Annuity Present Value. An investment offers $4,500 per year for 15 years, with the first payment occurring 1 year from now. If the required return is 10 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? 20) Calculating L
What is the Future Value of an Annuity with $7000 for a period of 15 years at an interest rate of 9% per annum? Is there a difference in Future Value if the payments are due at the beginning and end of the period?
A retirement plan guarantees to pay to you or your estate a fixed amount for 20 years. At the time of retirement you will have $73,425 to your credit in the plan. The plan anticipates earning 9% interest. Given the following information, how much will your annual benefits be? Present value of $1 PVIF = .18 Future va
How do these agencies below impact the administration and enforcement of ERISA: 1) US Department of Labor (DOL) 2) Internal Revenue Service (IRS) 3) Pension Benefit Guaranty Corporation (PBGC)
On January 1, 2007 Kiner Co. issued five-year bonds with a face value of $400,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%. Present value table factors are: Present value of 1 for 5 periods at 10% .62092 Present value of 1 for 5 periods at 12% .56743
In computing your answers to the cases below, you can round your answer to the nearest dollar. Present value tables are provided on the next page. Case A: On January 2, 2004, Notson Company loaned $50,000 to Pine Company. The terms of this loan agreement stipulate that Pine is to make 5 equal annual payments to Notson at 1
Your company is considering the following project and has a cost of capital of 15%. A. What is the Net Present Value of the initial project? B. What is the Net Present Value of the expansion option? C. Would you recommend the project? Why? Initial Project: Cost: $50,000 ATCFs of $9,000 each year for five years.
You have been totally disabled and you have been offered a settlement. In addition to your lifetime medical expenses you will receive a payment of 2,500,000 today or you can receive a lifetime annuity of 150,000 a year for the rest of your life. Using a life expectancy of 82 for men and 86 for women and your age of 32, compute
Find the future vales of the following ordinary annuities: a. FV of $400 paid each 6 months for 5 years at a nominal rate of 12 %, compounded semiannually. b: FV of $200 paid each 3 months for 5 years at a nominal rate of 12%, compounded quarterly c. These annuities receive the same amount of cash during the 5- year period
Consider three bonds with 8 percent coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will happen to the price of each bond if their yields increase to 9 percent?
With the following statistics make calculations and analysis. Giving attention to determination of the annuity factor. Transitional fund needed - $30,000 100% needed of the present take home pay which is $72,000 + $36,000 after 2 years. Tax rate is 30% Survivors benefits, including monies for kids are $2500 Current investmen
A bank consultant suggested that Sheila and Ed offer one of their best customers, Shanghai Winters, a 3.5% interest rate rather than the 8.0% going rate on a $70,000 five-year note receivable. Sheila and Ed would like you to explain the rationale behind the recommendation. Ed would also like to know what the interest rate would
1. Which of the following project evaluation techniques does not take into consideration the time value of money: a. NPV b. IRR c. PI d. Payback 2. In order to accept a project using the NPV evaluation technique, the NPV must be: a. Greater than the discount rate b. Positive c. Great
John and Barbara Roberts are starting to save for their daughter's college education. - Assume that today's date is September 1, 1998. é College costs are currently $10,000 a year and are expected to increase at a rate equal to 6 percent per year for the foreseeable future. All college payments are due at the beginning of
Answer the following questions related to Derek Lee Inc. : (a) Derek Lee Inc. has $572,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end
Your uncle has approached you with a personal finance decision. He tells you that he is currently eligible for a monthly pension benefit of $5,231 beginning January 2017. Alternatively, he can start drawing early monthly benefits of $3400 in January 2007 (a 35% reduction for a 10 year early start). You tell him you are ta
See attached file for proper format. Please provide the process and the answers to the problewms. 1. Which of the following two annuities would you prefer to receive (based on sound financial reasoning) if the appropriate discount rate is 12 percent? 0 0 0 600 600 600 600 |-
FINANCIAL ANALYSIS 1. My firm is considering replacing old equipment with a new, more efficient model. The old equipment bought three years ago for $100,000, has a 5 - year MACRS life and can be sold for $50,000 or used for three more years when its resale value will be zero. The new equipment will cost $210,000, will have
I need a description of the process targeted for improvement when the process will involve training in the newest technology available.
1. John is planning to use student loans to pay for graduate school tuition starting next year. His tuition will be $25,000 a year for three years. The loan program has an 12% annual rate of interest. A. If John borrows to pay all of his tuition, how much will he owe at the end of three years, assuming annual compounding? B