QUESTION Mme. Barefield wishes to have $150,000 at the end of 8 years. How much must she invest today to accomplish this purpose if the interest rate is a. 6% per year? b. 8% per year? Solution: Future Value of amount invested =$150,000 Time Period=8 years Interest Rate=6% Investment required today(Present Value of Investment)= Future […]
QUESTION Standard Corporation is investing $400,000 of fixed capital in a project that will be depreciated straight-line to zero over its 10-year life. Annual sales are expected to be $240,000, and annual cash operating expenses are expected to be $110,000. An investment of $40,000 in net working capital is required over the projects life. The […]
QUESTION Balance Sheets for Mergers Consider the following premerger information about firm X and firm Y: Firm X Firm Y Total earning $50,000 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION Kim Corporation is considering an investment of 750 million won with expected after-tax cash inflows of 175 million won per year for seven years. The required rate of return is 10%. What is the projects NPV? IRR? A. 102 million won ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION A bank is in the process of renegotiating a loan. The principal outstanding is $50 million and is to be paid back in two installments of $25 million each, plus interest of 8 percent. The new terms will stretch the loan out to five years with only interest payments of 6 percent, no principal […]
QUESTION What are the three components of float? Which are under the control of the firm seeking to reduce collection float? a). Float are the funds that are dispatched by a payer (one who pays) to the payee (one who receives), but not in a form that can be spent by the payee. The three […]
QUESTION The price/earnings ratios (from early 2012 prices and 2011 earnings) of several large companies are shown below: Apple 23 Coca-Cola 13 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION You”ve collected data on the betas of various mutual funds. Each fund and its beta is listed below: MUTUAL FUND BETA Weak Fund 0.23 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION Challenge Problem Tough times have hit the retail store chain of Brador, Inc. Analysts expect its dividend of $1.00 a share to fall by 50 percent next year and another 50 percent the following year before it returns to its normal growth pattern of 3 percent a year. If investors expect a return of […]
QUESTION Challenge Problem A $1,000 face value bond issued by the Dysane Company currently pays total annual interest of $79 per year and has a thirteen-year life. What is the present value, or worth, of this bond if investors are currently willing to accept a 10 percent annual rate of return on bonds of similar […]
