Homework Answers
Amount required to be invested today = Future amount required*Present value factor
= 3,900,000*PVF(6%, 40 years)
= 3,900,000*0.097
= $378,300
Let it takes x years
378,300*(1.14)^x = 3,900,000
(1.14)^x = 10.3093
X lies between 17 and 18
Hence, she can retire in 18 years
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You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B:for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($18,000 Investment) Year Cash Flow $ 9,000 7,000 8,000 7,600 Project Y (Slow-Motion Replays of Commercials) ($38,000 Investment) Year Cash Flow $ 19,000 12,000 13,000 15,000 WN a. Calculate the profitability index for project X....
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12%...
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12% 1 2. 3 0.893 0.797 012 4 6 7 8 9 10 .............. 11 12 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372...
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12%...
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12% 1 2. 3 0.893 0.797 012 4 6 7 8 9 10 .............. 11 12 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372...
Cascade Mining Company expects its earnings and dividends to increase by 8 percent per year over...
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TABLE II Present...
1 Appendix B Present value of $1. PVF PV=FV Percent Period 1% 5% 8% 9% 12%...
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Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment....
Keller Construction is
considering two new investments. Project E calls for the purchase
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hydraulic lift. Keller wishes to use a net present value profile in
comparing the projects. The investment and cash flow patterns are
as follows: Use Appendix B for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
Project E
Project H
($40,000 Investment)
($36,000 Investment)
Year
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You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Protect X (Videotapes of the Weather Report) ($ 36,000 Investment) Year Cash Flow $18,000 16,000 17,000 16,600 Project Y (Slow-Motion Replays of Commercials) ($56.000 Investment) Year Cash Flow $ 28,000 21.000 22.000 24,000 a. Calculate the profitability index for project X....
The Spartan Technology Company has a proposed contract with the Digital Systems Company of Michigan. The...
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property. The contract covers six years; at the end of six years,
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Use Appendix B for an approximate answer but calculate...
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are...
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Present Value of S1 8% 10.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.8930.8770.8700.862...
Present Value of S1 8% 10.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.8930.8770.8700.862 0.847 0.833 2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.79707690.7560.743 0.718 0.694 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.7940.772 0.7510.7120.6750.6580.640.609 0.579 4 0.961 0.924 0.888 0.855 0.823 0.792 0763 0.735 0.708 0.683 0.6360.592 0.5720.552 0.516 0.482 50.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.6210.56705190497 0476 0.4370.402 6 0.942 0.888 0.837 0.790 0746 0.705 0.666 0.630 0.596...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B:for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($18,000 Investment) Year Cash Flow $ 9,000 7,000 8,000 7,600 Project Y (Slow-Motion Replays of Commercials) ($38,000 Investment) Year Cash Flow $ 19,000 12,000 13,000 15,000 WN a. Calculate the profitability index for project X....
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Cascade Mining Company expects its earnings and dividends to
increase by 8 percent per year over the next 6 years and then to
remain relatively constant thereafter. The firm currently (that is,
as of year 0) pays a dividend of $4.5 per share. Determine the
value of a share of Cascade stock to an investor with a 11 percent
required rate of return. Use Table II to answer the question. Round
your answer to the nearest cent.
TABLE II Present...
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Keller Construction is
considering two new investments. Project E calls for the purchase
of earthmoving equipment. Project H represents an investment in a
hydraulic lift. Keller wishes to use a net present value profile in
comparing the projects. The investment and cash flow patterns are
as follows: Use Appendix B for an approximate answer but calculate
your final answer using the formula and financial calculator
methods.
Project E
Project H
($40,000 Investment)
($36,000 Investment)
Year
Cash Flow
Year
Cash Flow...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Protect X (Videotapes of the Weather Report) ($ 36,000 Investment) Year Cash Flow $18,000 16,000 17,000 16,600 Project Y (Slow-Motion Replays of Commercials) ($56.000 Investment) Year Cash Flow $ 28,000 21.000 22.000 24,000 a. Calculate the profitability index for project X....
The Spartan Technology Company has a proposed contract with the
Digital Systems Company of Michigan. The initial investment in land
and equipment will be $370,000. Of this amount, $250,000 is subject
to five-year MACRS depreciation. The balance is in nondepreciable
property. The contract covers six years; at the end of six years,
the nondepreciable assets will be sold for $120,000. The
depreciated assets will have zero resale value. Use Table 12-12.
Use Appendix B for an approximate answer but calculate...
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are as follows: Year Project A Project B $23,000 $20,000 2 10,000 9,000 3 10,000 15,000 1 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) Project A Project B Payback Period year(s) year(s) b-1. Calculate the...
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