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Investments

Compounding

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

Net effect on the balance on goods and services

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

Investment Banking

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

Discounted Payback, IRR

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

Unions and Investment Tax Credits

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

Loan types

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

Investment banking question

What does the following statement mean? Investment banking is a demanding profession; investment banks want the employees to work as hard as possible.

Present value

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

Gross private domestic investment spending is evaluated.

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

Evaluating the proposed project

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

amount of investments accumulate

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 truck is Purchased

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

Project Valuation

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

Couples' case

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

profitability of this investment

"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

Finance: Stock Valuation

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 capit

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

Planning for capital investments

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

Planning for capital investments

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

Investment Decisions

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

Monetary Policy: money, credit, the Federal Reserve, interest

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

Evaluating an investment

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

Valuing an Energy Investment using Oil Options

The Pampa Oil Company operates oil and gas exploration throughout the panhandle of Texas. The firm recently was approached by a wildcatter named William "Wild Bill" Donavan with the prospect to develop what he thought was a sure thing. Wild Bill owned the lease and wanted to sell it to Pampa to meet some rather pressing gambli