How much will she have in December of 2007? (Assume that a deposit is made in 2007. Make sure to count the years carefully.) 8. Mr. Flint retired as president of the Color Tile Company but is currently on a consulting contract for $45,000 per year for the next 10 years.
Answer: Amount of discount = 70,000 * .03 = $2100. Net amount to borrow from bank = 70,000 – 2100 = $67,900. Interest cost of borrowing money at 6.5% = 67,900 * .065 * (60-10 days)/365 day in a year = $604.59. Amount saved by borrowing money to pay within time period to take advantage of discount = $2100-$604.59 = $1495.41 2) Determine the monthly payments for a $4000 loan at 5.5% add-on interest for one year. Answer: 4000 * .055 * 1 = 220.00 in interest.
The lease contract obligates Sangamon to make five equal annual payments of $30,000 to Bismark that begin immediately after the sale. You may assume that the equipment has a useful life of 8 years at the time of the sale. Required: 1. What is the lessor’s effective rate of return from the lease contract? 2.
Answer AR= 20x20000=400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Answer Equity multiplier Asset /equity = 2.5/1 A=L+E 2.5=1.5=+1 Debt/asset = 1.5/2.5 = .6 3-3 Market/Book Ratio Winston Washers’s stock price is $75 per share. Winston has $10 billion in total as- sets.
A bond has a par value of $100,000 and pays interest revenues of $5,000 per year. This bond has a five-year life and a current market price of $98,000. Calculate the yield-to-maturity of this bond. (Points : 10) .3. An investor purchased call options for $2 per option.
For example, a city might condition a permit for development of a property into a subdivision of homes upon the developer setting aside certain areas for public park area, constructing streets to city standards and then dedicating the streets to the city, as well as paying an exaction designed to offset the projected city infrastructure costs associated with the new development, such as sewage treatment or school construction. The Supreme Court has said that such regulatory conditions and exactions do not constitute a taking if they have an essential nexus to a legitimate government interest and they bear a rough proportionality to the impacts caused by the development. For example, increasing the size of a commercial establishment and the construction of a large parking lot may cause a substantial increase in impervious surfaces and could justify a requirement that the property owner leave certain property as undeveloped flood
To calculate the cost of debt we could have used the CAPM, but as it is better to be forward looking, it is preferable to take into account the yield to maturity, the probability of default and the dollar loss in the case of default. We can then write the debt cost of capital as: rD = y - pL In this case Nike’s riskiness of debt can be assumed to be equal to zero. Then pL = 0. The debt cost of capital is thus simply the yield to maturity on a Nike’s bond.
80*7.1607+1000*.3555 = $928 • 5-2 Yield to Maturity for Annual payments Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity? 100+1000-850/12/1000+850/2 = 112.5/925 = .1216 or 12.16% • 5-6 Maturity Risk Premium The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years.
The fire administration code is also the building code and guides on building in cities in United States (Smedy, 2005). First, small convenience stores are only to be built at specified intersections. This law is appropriate for it prevents mushrooming of buildings without authorization from the fire and building departments. Second, a major development; for example, a covered mall have to have the maps from the municipality detailed deeply. As well, a developer has to have plans for improvement of the traffic signals and road improvements for the purposes of gaining the zoning approval from the relevant authorities.
They were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $20,000. If Stine uses straight-line depreciation, annual depreciation will be • $3,760. • $4,072.