Finance Answers

Eggz, Inc., is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale. The equipment will cost $425,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $25,000 at the end of the project in 5 years. Sales would be $275,000 per year, with annual fixed costs of $47,000 and variable costs equal to 35 percent of sales. The project would require an investment of $25,000 in NWC that would be returned at the end of the project. The tax rate is 22 percent and the required return is 9 percent.


Calculate the NPV of this project.

A five-year project has an initial fixed asset investment of $315,000, an initial NWC investment of $25,000, and an annual OCF of −$35,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11 percent, what is this project’s equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Jane Nursery grows pink and peach roses in her 100 by 100 foot garden. She
then sells it at the local farmers' market. Two month ago, she was able to
produce and sell 12,000 buds of roses. Last month, she tried a new fertilizer
that promised a 50% increase in yield. She harvested 1,980 buds of roses. Did
the fertilizer live up to its promise?

Jane Nursery grows pink and peach roses in her 100 by 100 foot garden. She
then sells it at the local farmers' market. Two month ago, she was able to
produce and sell 12,000 buds of roses. Last month, she tried a new fertilizer
that promised a 50% increase in yield. She harvested 1,980 buds of roses. Did
the fertilizer live up to its promise?

A man is planning to retire in 25 years. He wishes to deposit a regular amount every three
months until he retires, so that, beginning of one year following his retirement, he will
receive annual payments of $60,000 for the next 10 years. How much must he deposit if
the interest rate is 6 percent compounded quarterly?

What is the amount of 10 equal annual deposits that can provide five annual withdrawals
when the first withdrawals of $5,000 is made at the end of Year 11 and each subsequent
withdrawal increases by $400 if the interest is 9 percent compounded quarterly?

For an interest rate of 13 percent compounded annually, how much will be required in
four years to repay a $25,000 loan received now?

Suppose that $2,000 is placed in a bank account at the end of each quarter over the next
15 years. What is the future worth at the end of 15 years when the interest rate is 6
percent compounded monthly?

Angeline wishes to make six annual deposits in the amounts of $1,000, $2,000, $3,000,
$4,000, $5,000 and $6,000, in that order, into a fund that pays interest at rate of 5% per
annum. Determine the value of amount today if
i) the interest is compounded annually
ii) the interest is compounded quarterly.

Assume that your friend purchase a 6-year, 8 percent savings certificate for $1,000. If
interest is compounded annually, what will be the value of the certificate when it matures?
What is the difference between the ending value of the savings certificate compounded
semi-annually and the one compounded annually?