QUESTION 4. Which one of the following methods determines the amount of the change a proposed project will have on the value of a firm?net present valuediscounted paybackinternal rate of returnprofitability indexpayback Net Present Value and Profitability Index methods would determine the amount of the change a proposed project will have on the value of […]
QUESTION In 2008 Pandora, Inc, makes a rights issue at a subscription price of $5 a share. One new share can be purchased for every four shares held. Before the issue there were 10 million shares outstanding and the share price was $6.a. what is the total amount of new money raised?b. What is the […]
QUESTION Suppose you inherited $630,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years? (Points : 10)$49,023.94$65,365.26$81,052.92$79,745.61$81,706.57 I did this with Excel. If you withdraw $65,365.25 at the end of each year, you could live off the money for 20 years and […]
QUESTION what are some factors a finance manager considers in choosing an appropriate discount rate.? thank you The discount rate is an interest rate used to determine how much future cash flows are worth today. Discount rates are used in valuation analysis when cash flows are expected to receive over long-periods of time. The discount […]
QUESTION Annas, Inc. just purchased some equipment at a cost of $20,000. What is the accumulated depreciation of this equipment after year 3 if the company applies a 3 year MACRS depreciation schedule?3 Year MACRSYear 1 2 3 4Depreciation % 33.33% 44.45% 14.81% 7.41%Answera.$1,482b.$15,720c.$18,518d.$2,962 Calculation of depreciton expense for three years as follows. Year Asset […]
QUESTION A pro forma financial statement is one that:Answera.is expressed as a percentage of the total sales of the firmb.projects future years operationsc.reflects the past and current operations of the firmd.is expressed relative to a chosen base years financial statement A pro forma financial statement is one that: Answer a. is expressed as a percentage […]
QUESTION Joe-Tech has 2 mutually exclusive projects of equal size. Project A is rather risky and has an NPV of $7 million at a risk adjusted discount rate. Project B is quite safe and has an NPV of $5 million at a risk adjusted discount rate. What factor(s) should the company consider in choosing between […]
QUESTION The rate of inflation for the coming year is expected to be 3 percent and the rate of inflation in Year 2 and thereafteris respected to remain constant at some level above 3 percent. Assume that the real risk-free rate r* is 2 percent for all maturities and the expectations theory fully explains the […]
QUESTION The Radek company uses cost-plus pricing with a 30% mark-up. The company is currently selling 80,000 units at $65 per unit. Each unit has a variable cost of $47. In addition, the company incurs $240,000 in fixed costs annually. If demand falls to 40,000 units and the company wants to continue to cha Costs […]
QUESTION What is the yield to maturity on a 10-year, 9 percent annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or at a premium tell you about the relationship between r and the bonds coupon rate?What is the […]
