You are quoted an intrest rate of 6% on an investment of 10 million. What is the value of your investment after four years if intrest is compunded annually, monthly, continously? What is the PV of $100 received in Year 10 at a discount rate of 1% Year 10 at a discount rate of 13% Year 15 at a discount rate of 25% Each of
Suppose a nation's savings, gross private domestic investment, government spending, and taxes remained unchanged from period 1 to period 2, but tariffs and quotas on imported goods and services rose by 20% from period 1 to period 2. The net effect on the balance on goods and services would be: A. It would make the balance
Plant Inc. is considering making an offer to purchase Palmer Corp. Plant's VP has collected the following information: Plant Palmer Price-earnings Ratio 14.00 11.0 Shares Outstanding 1,000,000 620,000 Earnings
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a) Which project(s) should be chosen if the discounted payback must be achieved in at least 4 years? b) Which project(s) should be chosen if internal rate of return period is the criteria for each project?
The following projects are being considered by the Corporate Investment Committee who has an investment budget of $900,000. The budget restriction is for the up front investment in the current year only. The MARR used for the evaluation should be 12%. a) Which project(s) should be chosen if the discounted payback must be a
In an effort to stop the migration of many of the automobile manufacturing facilities from the Detroit area, Detroit's city council is considering passing a statute that would give investment tax credits to auto manufacturing. Effectively, this would reduce auto manufacturing costs of using capital and high tech equipment in the
3. You have a choice of two investment accounts. Investment A is a 15-year annuity that features end-of-month $1,200 payments and has an interest rate of 8.5 percent compounded monthly. Investment B is an 8 percent continuously compounded lump sum investment, also good for 15 years. How much money would you need to invest in B
What does the following statement mean? Investment banking is a demanding profession; investment banks want the employees to work as hard as possible.
30. Which one of the following statements concerning net present value (NPV) is correct? A. An investment should be accepted if, and only if, the NPV is exactly equal to zero. B. An investment should be accepted only if the NPV is equal to the initial cash flow. C. An investment should be accepted if the NPV is positive and
1. Which of the following is not included in gross private domestic investment spending? Household spending on durable goods. Spending on business inventories. Business spending on plant and equipment. Household spending on residential construction none of the above All o
Please help with the following problem. Evaluate the feasibility of investing 95,000$ in a piece of equipment having a 5-year life. In assessing the proposed project, you have been able to estimate the cash flows associated with the proposed project to be: Year Amount 1 20,000 2 25,000
5-1A. (Compound interest) To what amount will the following investments accumulate? a. $5,000 invested for 10 years at 10 percent compounded annually b. $8,000 invested for 7 years at 8 percent compounded annually c. $775 invested for 12 years at 12 percent compounded annually d. $21,000 invested for 5 years at 5 percent
A firm is considering two alternative projects. Project A needs an investment of $800,000. Project B needs an investment of $750,000. Relevant annual cash flow data for the two projects over their expected seven-year lives are as follows: Project A Project B
For the following conditions determine the owning cost, total operating and total cost per operating hour for the excavator.
An excavator has a purchase price of $2,000,000, has a rating of 1,500 kW, an estimated life of 10 years an annual operating usage of 2,500 hours. A return on investment of 15% is required. For the following conditions determine the owning cost, total operating and total cost per operating hour for the excavator. a) Fuel cost
A truck is purchased for $1,500,000 and is planned to have an operating life of 10 years working 5,000 hours per year. What is the hourly owning cost of this machine , assuming the company requires a 16% return on investment ,using a) the average investment method b) the equivalent lease cost method
Please see the attached file. HMG is considering the manufacture of a new chemical compound that is used to make high-pressure plastic containers. An investment of $4 million in plant and equipment is required. The firm estimates the investment will have a five-year life, using straight-line depreciation toward a zero salvage
The condominium - expected annual increase in market value = 2%. Municipal bonds - expected annual yield = 3%. High-yield corporate stocks - expected dividend yield = 5%. Savings account in a commercial bank-expected annual yield = 1%. High-growth common stocks - expected annual increase in market value = 6%; expected divide
4. A new toll bridge across the Hudson River is being considered to replace the Tappan Zee Bridge. Investment costs are expected to be $18M, Operating expense will be $375K per year and the bridge must be resurfaced every 5th year of its 30 year life at a cost of $1.250M. Toll revenue is expected to be $2.8M in the first year
"I bought a one unit apartment (2 bedrooms, 2 baths, kitchen and living room) of the Executive Center for $300,000 with a loan from BOH for 6% per year, payable in equal monthly installments over a 20 year period. I hired also the Best Western Company to manage the unit for a fee of $500 a month. Before I rented the apartment t
Your firm has identified three potential investment priorities. The projects and their cash flows are shown here: Project Cash flow today ($) Cash flow in one year ($) A -10 20 B
Please show work. 1. Use the information for the question(s) below. Vandhalia Corporation is expected pay a dividend of $1.40 per share at the end of this year and a $1.50 per share at the end of the second year. You expect Vandhalia's stock price to be $25.00 at the end of two years. Vandhalia's equity cost of capi
A. What alternative investment has the lowest possible volatilty while having the same expected return as Microsoft? b. What investment has the highest possible expected return while having the same volatility as Microsoft?
Your investment portfolio consists of $15,000 invested in one one stock - Microsoft. Suppose the risk-free rate is 5%. Microsoft stock has an expeted return of 12% and a volatility of 40%, and the market portfolio has an expected return of 10% and a volatility of 18%. Under the CAPM assumptions: a. What alternative invest
Show the percentage change in real GDP over each those decades. Do the percentages of GDP spent on consumption (C), investment (I), government (G), exports (X), imports ((M) differ significantly among those years?
1. From the Bureau of Economic Analysis Web page (http://www.bea.gov), compare real GDP for 1960, 1970, 1980, 1990, and 2000. (a) Show the percentage change in real GDP over each those decades. (b) Do the percentages of GDP spent on consumption (C), investment (I), government (G), exports (X), imports ((M) differ signifi
Carolina Clinic is considering investing in new heart monitoring equipment. It has two options: Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the option B machin
Tony Siebers is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Tony, an entrepreneur at heart, realizes that few good commuting alternatives are ava
1. Find the current value per share of Suarez Manufacturing's common stock. 2. Find the value of Suarez's common stock in the event that it undertakes the proposed risky investment and assuming that the dividend growth rate stays at 13% forever.
Early in 2010, Inez Marcus, the chief financial officer for Suarez Manufacturing, was given the task of assessing the impact of a proposed risky investment on the firm's stock value. To perform the necessary analysis, Inez gathered the following information on the firms stock. During the immediate past 5 years (2005-2009), th
Pet Store - Part 1 A local pet store which has concentrated on selling puppies, is considering adding a line of pet food. A contractor estimates that is will cost $10,000 to convert some storage space into a retail area for the food. The store will purchase the specialty food for $15 and sell it for $30. Marketing research in
The reference organization is Wal-Mart. Please address the following questions: 1. To what extent is Wal-Mart's financial health affected by the Fed's policy on money and interest rates? What aspects of Fed actions affects Wal-Mart the most? 2. If inflation increases and the Fed acts to lower it, explain how the Open
You are given the following information for the equations for investment demand, private saving, the government's budget deficit, and natural real GDP: Id=2400-125r, S=1760+75r, T-G=-360, and Yn=12000. Suppose that this is a closed economy. the equilibrium interest rate is the one at which national saving and investment demand are equal. (a) Derive the equation for national saving. Compute the government's budget deficit as a percent of natural real GDP. (b) compute the equilibrium interest rate. compute the amounts of investment demand, private saving, and national saving at the equilibrium interest rate. (c) Suppose that fiscal policymakers cut the government's budget deficit to 1 percent of natural Real GDP. calculate the new amound of the government's budget deficit. derive the new equation for national saving. Compute the new equilibrium interest rate. Compute the amounts of investment demand, private saving, and national saving as the new equilibrium interest rate. Given the information from the problem above, assume a small open economy and that the foreign interest rate is 4.6 percent. (a) compute the amounts of investment demand, private saving, national saving, net exports, and net foreign borrowing at the foreign interest rate. Suppose that fiscal policy makers cut the government's budget deficit. Compute the new amounts of investment demand, private saving, national saving, and net exports. Is the economy now borrowing from the rest of the world or lending to the rest of the world? Suppose that instead of a small open economy, we have a large open economy, and that initially the domestic and foreign interest rate is 4.6 percent. Again, fiscal policy makers cut the government's budget deficit to 1 percent of natural real GDP. As a result, the domestic and foreign interest rates decline to 4.2 percent. Compute the new amounts of investment demand, private saving, the government's budget deficit, national saving, net exports, and either foreign borrowing or foreign lending at the new domestic and foreign interest rates.
You are given the following information for the equations for investment demand, private saving, the government's budget deficit, and natural real GDP: Id=2400-125r, S=1760+75r, T-G=-360, and Yn=12000. Suppose that this is a closed economy. the equilibrium interest rate is the one at which national saving and investment demand a
You have been retained to evaluate a major investment for a technology company. The cost of the project is $100 million. If the project is successful, it will generate expected profits of $15 million per year forever, which has a present value of $150 million. However, there is a 50% chance that the project will be a complete