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Finance
A smooth saleperson comes to visit your office with a proposal to sell your firm some new machinery to install in your vacant warehouse building on the property that has no alternative use. The salesperson claims that this technology produces products that should provide you with revenues next year of $7 million with a cost of goods to be $5 million. Both of these are expected to grow at a rate of 15% per year till year 6. Your firm faces a 35% tax rate, a 12% discount rate and you can depreciate your new investment using the straight line method over the six years, at which point the value of the venture moving forward will be $2 million. (This $2 million is the terminal value that is in year 6 dollars and is the PV of all cash flows year 7 and beyond.) The capital expenditure of this project is $6M. What is the NPV of the project? Assume that you have no significant working capital costs.(Enter just the number without the $ sign or a comma; round off decimals.) (You are strongly encouraged to use a spreadsh
Finance
The city of Middleville is considering offering public bus service. Setting up the service will cost the city $1.2M (where M stands for million). The useful life of the buses is 25 years. Annual maintenance of the buses would cost $100,000 per year and they would need a major overhaul in year 15 that will cost a total of $700,000. This overhaul is in addition to the annual maintenance. Annual labor and administrative costs will begin at $180,000 in year 1 and grow at 2% per year thereafter. The buses will generate a revenue of $150,000 in year 1 and it will grow at 4% per year thereafter. Reduced parking requirements and other benefits generated by the project will save the city $200,000/year. The salvage value (price the city can get in the future after maintenance) of the used buses in year 25 is expected to be $300,000. What is the NPV of the bus proposal? The city does not pay taxes and the discount rate is 5%.
A:
1) 59693
2) -82207
3) 257413
4) 1381432
A:
1) 59693
2) -82207
3) 257413
4) 1381432
Finance
A city is spending $20 million on a new sewage system. The expected life of the system is 40 years and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.6 million per year. If nominal rate is 8% compounded continuously, what is the capitalized worth of the system?
Finance
A heat exchanger is needed in a chemical process. If interest is 9% compounded quarterly, determine which of the following is cheaper by comparing the capitalized costs:
a.Exchanger A costs P 155,350 with a scrap value of P 15,000 and a useful life of 7 years.
b. Exchanger B costs P 165,850 with a scrap value of P18,500 and a useful life of 10 years.
a.Exchanger A costs P 155,350 with a scrap value of P 15,000 and a useful life of 7 years.
b. Exchanger B costs P 165,850 with a scrap value of P18,500 and a useful life of 10 years.
Finance
A woman is considering giving an endowment to a university in order to provide payments of P55,000, P85,000, respectively, at the end of the first, and second semiannual during a year. If the interest rate is 12% compounded quarterly, what is the capitalized equivalent that must be deposited now so that the semiannual payments can be repeated forever?
Finance
A fund is to be donated by wealthy man to provide scholarships to deserving students. The fund will grant P5,000 for each semiannual of the first five years, P8000 for each quarter of the next five years, and P10,000 each month thereafter. The scholarship will start one semiannual after the fund is established. If the fund earns 8% per year compounded bimonthly, what is the amount of the donation?
Finance
Should Hong Kong maintain its peg to the US dollar or should it change its monetary policy and freely float? Why?
Finance
A dealer of electronic goods allows 12% discount and still makes a profit of 10%. If he gains Rs 120 on the sales of goods, find the marked price
Finance
Mark purchases a stock one year ago for $26. the stocj is now worth $34, and the totl return to Mark for owning the stock was 0.39. what is the dollar amount of dividents that he received for owning the stock during the year?
Finance
Consider a standard coupon bond that matures 25 years from today. The principal value of the contract is $10,000, and the coupon rate is 7%. If the yield of the bond is 5%, what is the price of the bond today if the coupon is paid annually with the first coupon payment occurring twelve months from now?
