How many years will it take for $197,000 to grow to be $554,000 if it is invested in an account with a quoted annual interest rate of 8% with monthly compounding of interest? 8. At what quoted annual interest rate must $134,000 be invested so that it will grow to be $459,000 in 15 years if interest is compounded weekly? 9. An annuity pays $24,000 per year for 11 years (first payment one year from today).
The table below contains the relevant information for this project. | | | Development cost | $ | 1,050,000 | | Estimated development time | | 9 | months | Pilot testing | $ | 200,000 | | Ramp-up cost | $ | 400,000 | | Marketing and support cost | $ | 150,000 | per year | Sales and production volume | | 60,000 | per year | Unit production cost | $ | 100 | | Unit price | $ | 185 | | Interest rate | | 8 | % | | Tuff Wheels also has provided the project plan shown below. As can be seen in the project plan, the company thinks that the product life will be three years until a new product must be created. | a. | What is the net present value (discounted at 8%) of this project?
Using the Black-Scholes pricing model, the Company determined that the grant-date fair-value-based measure of the awards was $15. On the grant date, the Company’s stock was trading at $30 per share. On January 1, 2014, to provide additional retention incentive to its employees for the third and fourth years of service of the 2012 annual grant, OMS will change the terms of the award by modifying the exercise price to $20 per share. Using the Black-Scholes pricing model, management determined that the fair-value-based measure of the awards was $12 after modification and $9 before the terms of the award were modified. The modification did not affect any of the other terms or conditions of the awards.
[4] Fifth edition of RWJR, #4.5, page 93 Further question: (d) If Ms. Fawn wishes to consume the same quantity in each period, should she borrow or lend in the current period? By how much? 2. A capital investment project is expected to produce an after-tax net cash flow of $1,200 in one year. After-tax net cash flows are then expected to grow at a rate of 4% per year for 7 years, ending 8 years from today.
Capital Budgeting Case Virginia Sacco University of Phoenix Quantitative Reasoning for Business QRB 501 Li Guohong March 10, 2014 Capital Budgeting Case My company is contemplating to acquire another corporation, “Corporation A” or “Corporation B” on a $250,000 budget. Corporation A: Revenues = $100,000 in year one, increasing by 10% each year. Expenses = $20,000 in year one, increasing by 15% each year/ Depreciation expense = $5,000 each year. Tax rate = 25%. Discount rate = 10%.
All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the following month. Forecasted sales for the first five months of 20X2 are: January, 1,500 units,- February, 1,600 units; March, 1,800 units; April, 2,000 units; May, 2,100 units. 2. Management wants to maintain the finished goods inventory at 30% of the following month's sales.
During 2011, Z-Mart made installments sales of $300,000 and received payments of $135,000 on those sales. Z-Mart's gross profit on sales is 30%. Required: Prepare the necessary journal entries for 2011. 10 Solutions Multiple Choice Question Number Answer 1 a 2 c 3 b 4 c 5 d 6 c 7 a
,Sarah L. G January 6, 2013 Written Assignment #1 1. A) $1,000 with 5% interest after 10 years gives you $1,628. Therefore, you would gain $628 in interest. B) If the interest is withdrawn each year, a total of $500 would be earned because the $1,000 investment would earn $50 of simple interest each year. C) The answers are different because if the interest is left untouched, it makes the principal amount higher each year, giving more money after 10 years.
The applicable MACRS rates are 33%, 45%, 15%, and 7%. If the computer is purchased, a maintenance contract must be obtained at a cost of $25,000, payable at the beginning of each year. After 4 years, the computer will be sold. Millon’s best estimate of its residual value at that time is $125,000. Because technology is changing rapidly, however, the residual value is uncertain.
SciTronics had a total of $ 102,000 (75,000 + 27,000) of capital at year-end 2008 and earned before interest but after taxes (EBIAT) $ 16,120 (avg. tax rate = 38%) during 2008. Its return on capital was 15.8% in 2008 which represented an increase from the 8.7% earned in 2005. 4. SciTronics had $ 75,000 of owners’ equity and earned $ 14,000 after taxes in 2008.