Discount rate. Future Bookstore sells books before they are published. Today, they are offering the...
Discount rate. Future Bookstore sells books before they are published. Today, they are offering the book Adventures in Finance for $12.15, but the book will not be published for another 4 years. The retail price when the book is published will be $23. What is the discount rate Future Bookstore is offering its customers for this book?
Homework Answers
| Price after 4 years | 23 | ||||
| Price offered today | 12.15 | ||||
| (this is present value of $ 23) | |||||
| PVf for 4 th year (12.15/23) | 0.52826 | ||||
| Rate at which PV factor arises at 4th year is 17.30% | |||||
| Therefore, Discount rate = 17.30% | |||||
Add Answer to:
Discount rate. Future Bookstore sells books before they are
published. Today, they are offering the...
Books R Us sells vintage collectible books. The company is willing to sell particular book for...
Books R Us sells vintage collectible books. The company is willing to sell particular book for as little as $45. Its main competitor is Hard 2 Find Books, which is willing to sell the book for as little as $30. The current market price of that particular book is $75. What is the total producer surplus for the two firms? Your Answer: Answer Karen can make 4 jackets or 10 ties in one day working at the clothing factory. Joe...
please answer 16,18 and 20 no pictures answers borrowers? Explain Calculating Future Val assuming an interes...
please answer 16,18 and 20
no pictures answers
borrowers? Explain Calculating Future Val assuming an interes Calculating Fu compounded daily on What is the an uninformed beport to potential The bank uses daily compound u is the bank required by law to report to potential Explain why this rate is misleading to an uninformed borrower Future Values (LOI) What is the future value of 53.100 in 17 years interest rate of 8.4 percent compounded semiannually? Future Values (L01 Spartan Credit...
Fin-Tech, a finance and technology firm, floated its shares today. The IPO prospectus notes that Fin-Tech...
Fin-Tech, a finance and technology firm, floated its shares today. The IPO prospectus notes that Fin-Tech does not plan to pay any dividend in the foreseeable future and reported annual earnings of $4 per share (this is the earning as of today). Fin-Tech’s Return on Equity is 15% and expected to stay the same forever. Investors agree that the appropriate discount rate is 10% and that in 4 years the firm will start distributing a dividend keeping the payout ratio...
audon_ - Manag... Q Can This Bookstore Be Saved? In early 2009, when BN parchased Pictiomwise Waldenbooks re...
audon_ - Manag... Q Can This Bookstore Be Saved? In early 2009, when BN parchased Pictiomwise Waldenbooks rebranded as Bonders Express) oneof the biggest electromic book proprietors irn had already seen the demise of B Since 3993, eleven major U.S. bookstore chains have beem whittled down to sis, and nearly 3,300 stores to other popular e-hooks for less than $10 While puhlishens firented that readers would be reunalitioned devalue de worth of the printnd word and that oftime stores rould...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Weghorst Ltd is a 100% equity-financed company (no debt or preference shares); hence, its wACC equals its cost of equity. Weghorst Ltd's retained earnings will be sufficient to...
Could you please help me with these 3 questions? An insurance company is offering a new...
Could you please help me with these 3 questions?
An insurance company is offering a new policy to its customers. Typically the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday Second birthday Third birthday Fourth birthday Fifth birthday Sixth birthday Ꮎ Ꮎ Ꮎ Ꮎ Ꮎ Ꮎ 900 900 $...
4. Bond Valuation Suppose you invest $3500 today and receive $9500 in five years. a. What...
4. Bond Valuation Suppose you invest $3500 today and receive $9500 in five years. a. What is the IRR of this opportunity? b. Suppose another investment opportunity also requires $3500 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the mount you will receive each year? 5. Bond Valuation Suppose that Ally Financial Inc. issued a bond with 10...
Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60%...
Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60% Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete...
6. Solving for the WACC The WACC is used as the discount rate to evaluate various...
6. Solving for the WACC The WACC is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an appropriate discount rate only for a project of average risk. Analyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address. Consider the case of Turnbull Co. Turnbull Co. has a target capital structure of 45% debt, 4% preferred...
Books R Us sells vintage collectible books. The company is willing to sell particular book for as little as $45. Its main competitor is Hard 2 Find Books, which is willing to sell the book for as little as $30. The current market price of that particular book is $75. What is the total producer surplus for the two firms? Your Answer: Answer Karen can make 4 jackets or 10 ties in one day working at the clothing factory. Joe...
please answer 16,18 and 20
no pictures answers
borrowers? Explain Calculating Future Val assuming an interes Calculating Fu compounded daily on What is the an uninformed beport to potential The bank uses daily compound u is the bank required by law to report to potential Explain why this rate is misleading to an uninformed borrower Future Values (LOI) What is the future value of 53.100 in 17 years interest rate of 8.4 percent compounded semiannually? Future Values (L01 Spartan Credit...
audon_ - Manag... Q Can This Bookstore Be Saved? In early 2009, when BN parchased Pictiomwise Waldenbooks rebranded as Bonders Express) oneof the biggest electromic book proprietors irn had already seen the demise of B Since 3993, eleven major U.S. bookstore chains have beem whittled down to sis, and nearly 3,300 stores to other popular e-hooks for less than $10 While puhlishens firented that readers would be reunalitioned devalue de worth of the printnd word and that oftime stores rould...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Weghorst Ltd is a 100% equity-financed company (no debt or preference shares); hence, its wACC equals its cost of equity. Weghorst Ltd's retained earnings will be sufficient to...
Could you please help me with these 3 questions?
An insurance company is offering a new policy to its customers. Typically the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday Second birthday Third birthday Fourth birthday Fifth birthday Sixth birthday Ꮎ Ꮎ Ꮎ Ꮎ Ꮎ Ꮎ 900 900 $...
4. Bond Valuation Suppose you invest $3500 today and receive $9500 in five years. a. What is the IRR of this opportunity? b. Suppose another investment opportunity also requires $3500 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the mount you will receive each year? 5. Bond Valuation Suppose that Ally Financial Inc. issued a bond with 10...
Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60% Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete...
Most questions answered within 3 hours.
-
Atmospheric Mass
Venus and Earth have about the same mass and radius, but the
atmospheric pressure...
asked 27 minutes ago -
5. Discuss the use of fault tree analysis (FTA) for risk
assessment (maximum one paragraph).
asked 1 hour ago -
Given that a sample of aluminium oxide has a Young's modulus of
393 GPa and a...
asked 3 hours ago -
At a certain temperature, the equilibrium constant, Kc, for this
reaction is 53.3.
H2(g)+I2(g)−⇀↽−2HI(g)Kc=53.3
At this...
asked 4 hours ago -
Question1 ) The STL provides similiar classes called stack and
queue, both of which gave functions...
asked 5 hours ago -
For Questions 1-4, assume you have 5 bits available:
1. For (positive) integers: What is the...
asked 5 hours ago -
convert grams into vloume with the density of water being at
.997514 g/cm^3 at 23.1 Celsuis...
asked 7 hours ago -
Foreman company obtained a $20,000, 6% loan on May 1, 2018.
Principal and interest will be...
asked 7 hours ago -
5. Problem 11.05 (Discounted Payback)
eBook
Project L costs $60,000, its expected cash inflows are $14,000
per...
asked 8 hours ago -
1. Which of the following is true about politics and health
organizations?
A. Health organizations are...
asked 8 hours ago -
A space vehicle is coasting at a constant velocity of 18.1 m/s
in the +y direction...
asked 9 hours ago -
5) Use the following balanced equation to answer questions
(a)-(i).
3 Cu(s) + 8 HNO3(aq) →...
asked 9 hours ago