Share
Explore BrainMass

Investments

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

The total percentage return from investing

Measuring Stock Returns: Suppose you bought a stock at the beginning of the year for $ 76.50. During the year, the stock paid a dividend of $ 0.70 per share and had an ending share price of $ 99.25. what is the total percentage return from investing in that stock over the year?

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

Present Value & Rate of Interest

Assume that you will receive $2000 a year in years 1 through 5, $3000 a year in years 6 through 8, and $4000 in year 9 with all cash flows to be received at the end of the year. If you require a 14 percent rate of return what is the present value of these cash flows? If you presently have $6,000 invested at a rate of 15%, ho

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

Capitalization rate /total return

Given the following characteristics of a portfolio of large-cap stocks, calculate the capitalization rate over a one-year period, t0 to t1: P0 $125,000 P1 $132,000 D0 $3,750 D1 $4,225 Calculate the total return. Please show calculations.

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

Calculating IRR:

A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, should the firm accept the following project? Year Cash Flow 0 -$30,000 1 13,000 2 19,000 3 12,000

Net Present Value and Profitability Index.

A firm is considering two capital investment projects. Project A involves an initial cost of $125,000. The discounted present value of all future cash flows is $145,000. Project B requires an initial expenditure of $85,000. The discounted present value of all future cash flows is $102,000. (i) Calculate the net present value

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

Problems about U.S. net direct investment position

Explain the underlying basis for foreign direct investment, and discuss several factors that may contribute to it. What factors have likely contributed to the current U.S. net direct investment position?

effective annual interest rate..

1) A company makes a $1,000 investment every year on December 31. Interest is 10% per year, but compounded semi-annually (every 6 months). They make 10 investments in all. a) Find the effective annual interest rate, Please see the attached file.

Economic Profit Problem

You own a bagel shop that generates an accounting profit of $45,000 per year. When you started the shop you had to cash in $60,000 in investments to buy equipment for the shop. The investments were earning 8 percent per year. You also gave up a job paying $38,000 per year. What is your economic profit? a. $-15,000

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

the life of the project

Need some help answering the below question. Assume that an alternative has a 3-year life and that you calculated its annual worth over its 3-year lifecycle. If you were told to provide the annual worth of that alternative for a 4-year study period, would the annual worth value you calculated from the alternative's 3-year lif

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

System of Interstate Roadways in the US

The system of interstate roadways in the United States is a resource available to every citizen. But there is an ever increasing use of the roadways, and gridlock is becoming more severe everywhere. Should the U.S. government charge tolls for the use of certain roadways, or should investment be made to widen them with additional

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

Initial Investment Outlay

A company is considering an expansion project. Necessary equipment could be purchased for $9Million and the project would also require an intial $3Million investment in net operating working capital. the company's tax rate is 40%. What is the projects initial investment outlay?

Solving a payback period problem

You are considering making a movie. The movie is expected to cost $10 million upfront and take a year to make. After that, it is expected to make $5 million in the year it is released and $2 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will

Calculating the Net Present Value of an Investment

The following set of costs and benefits is given for a 5 - year period for a Malibu Beach Coral Mining. Year 0 1 2 3 4 5 Cost (1000 of $) 3000 Cost of coastal erosion 200 200 200 200 200 200 Benefits Reve

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

Plowback Rate Measuring Growth

XYZ Corporation wants to achieve a steady 7% growth rate. If it can achieve a 12% return on equity, what percentage of earnings must XYZ retain for investment purposes? Please explain process in solution.