a. Present value of dividend of $6 receivable for next twelve years @4% = $6*9.3851 = $56.31
Present value of $133 at the end of twelve years = $133*0.6246 = $83.07
So, the maximum price the investor will pay for the share = $56.31 + $83.07 = $139.38
b. Bond is of 20 years and 3 years have already been passe, so the remaining life of the bond is 17 years.
Present value of interest of $60 receivable for next seventeen years @12% = $60*7.1196 = $427.18
Present value of $1000 at the end of seventeen years = $1000*0.1456 = $145.60
So, the market value of the bond = $427.18 + $145.60 = $572.78
c. Alexis received $141.84 after 6 years by investing $100.00 in savings bond. The formula for future value = PV*(1+r)^n
Here 141.84 = 100*(1+r)^n
So (1+r)^n = 1.4184
So for r=6%, (1+r)^n = 1.4184
So the average annual return on investment here is 6%.
Answer the tollowing questions. Table 6-4 or Table 6-5. (Use appropriate factor(s) from the tables provided....
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 0.980 0.961 0.942 0.924 0.906 4% 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 6% 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 8% 0.9259 0.8573 0.7938 0.7350 0.6806 10% 0.9091 0.8264 0.7513 0.6830 0.6209 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 14% 0.8772 0.7695 0.6750 0.5921 0.5194 16% 0.8621 0.7432 0.6407 0.5523 0.4761 18% 0.8475...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 4°10 6% 8% 10% 12% 1 4% 1 6% 18% 20% 0.980 0.9615 0.9434 0.9259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333 0.961 0.9246 0.8900 0.8573 0.8264 0.7972 0.7695 0.7432 0.7182 0.6944 0.942 0.8890 0.8396 0.7938 0.7513 0.7118 0.6750 0.6407 0.6086 0.5787 0.924 0.8548 0.7921 0.7350 0.6830 0.6355 0.5921 0.906 0.8219 0.7473 0.6806 0.6209 0.5674 0.5194 0.4761 0.888 0.7903 0.7050 0.6302 0.5645 0.5066 0.4556 0.4104...
The folowing information apples to the questions displayed below The following capital expenditure projects have been proposed for management's consideration at Scott, Inc, for the upcoming budget year: Use Table 6-4 and Table 6-5 (Use appropriate factoris) from the tables provided, Round the PV factors to 4 Initial nvestment Amount of net cash return 0 $(64,000) (78.000) (156,000) $(156.000)$(312.000) 98.000 5,000 5,000 5,000 5,000 5,000 15,000 3411 105 52,000 52.000 52,000 52,000 31200 46,800 62400 78.000 56,000 56,000 56,000 56,000...
Cowboy Recording Studio is considering the investment of $135,600 in a new recording equipment. It is esimated that the new equipment will generate additional cash flow of $20,000 per year for each year of its 8-year life and will have a salvage value of $14,000 at the end of its life. Cowboys s financial managers estimate that the s cost of capital is 10%. Use b o and lab e s Use appropr ate factor s from the tables provided....
Lakeside, Inc., is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $10,000 per month. The new equipment will have a five-year life and cost $420,000, with an estimated salvage value of $30.000. Lakeside's cost of capital is 12%. Table6-4 and Ti in (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals. Calculate the net present value of the new production equipment TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT...
The following capital expenditure projects have been proposed for management's consideration at Scott, Inc., for the upcoming budget year: Use Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Project Year(s) A B C D E Initial investment 0 $ (63,000 ) $ (62,000 ) $ (138,000 ) $ (152,000 ) $ (304,000 ) Amount of net cash return 1 14,000 0 50,000 15,200 97,000 2 14,000 0 50,000 30,400...
! Required information (The following information applies to the questions displayed below.] On January 1, 2019, Learned Inc, issued $15 million face amount of 20-year, 18% stated rate bonds when market interest rates were 20%. The bonds pay interest semiannually each June 30 and December 31 and mature on December 31, 2038. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) Required: a. Calculate the proceeds (issue price) of Learned Inc.'s, bonds on January 1, 2019, assuming that...
TABLE 6.5 FACTORS FOR CALCULATING THE PRESENT VALUE OF AN ANNUITY OF SI Discount Rate 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% VODAWN 0.980 1.942 2.884 3.808 4.713 0.9615 1.8861 2.7751 3.6299 4.4518 0.9434 1.8334 2.6730 3.4651 4.2124 0.9259 1.7833 2.5771 3.3121 3.9927 0.9091 1.7355 2.4869 3.1699 3.7908 0.8929 1.6901 2.4018 3.0373 3.6048 0.8772 1.6467 2.3216 2.9137 3.4331 0.8621 1.6052 2.2459 2.7982 3.2743 0.8475 1.5656 2.1743 2.6901 3.1272 0.8333 1.5278 2.1065 2.5887 2.9906 3.6847 4.0386 4.3436 4.6065...
XYZ Company is considering the purchase of a new piece of equipment and has gathered the following information about the purchase: Initial investment ........ ... Annual cost savings ........ Salvage value in 6 years ..... Repair in 4 years Cost of capital ... Life of project ............... biect ......... ? $30,000 20% of original cost of the equipment $11,000 10% 6 years If the new piece of equipment is purchased then the equipment currently being used can be sold at...
51487 0879437 2 4 0123 2 789 22234568 0525 703 5 565 1153 925 5 2 2 11223 1 11122 12346791357 241 04 6875 2 7 iod 20- 01234567890 01234567890 20 TABLE 11.2A Present Value of $1 Periods 3.75% 0.9804 0.9612 0.9423 0.9238 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.6730 0.9709 0.9426 0.9151 0.8885 0.8626 0.8375 0.8131 0.7894 0.7664 0.7441 0.5537 0.9592 0.9201 0.8826 0.9524 0.9070 0.9259 0.8573 0.7938 0.7350 2 0.9290 0.9246 0.8890 0.8548 0.8219 0.7903 0.8900 0.8396 0.8734...