Homework Answers
| Present value Factor | Present Value | ||
| (b). i. | 5.3%,two-year bond | 0.901869 | 901.87 |
| ii. | 5.3%,Five year bond | 0.772428 | 772.43 |
| iii. | 10.3%,Five year bond | 0.6125230 | 612.52 |
You have estimated spot rates as follows: ri = 5.00%, r2 = 5.40%, r3 = 5.70%,...
You have estimated spot rates as follows: ri = 5.00%, r2 = 5.40%, r3 = 5.70%, r4 = 5.90%, rs = 6.00%. a. What are the discount factors for each date (that is, the present value of $1 paid in year 6)? (Do not round intermediate calculations. Round your answers to 3 decimal places.) Year Discount Factors b. Calculate the PV of the following $1,000 bonds assuming an annual coupon and maturity of: (i) 5%, two-year bond; (ii) 5%, five-year...
Assume the current interest rate on a 1-year Treasury bond (,R) is 6.50 percent, the current...
Assume the current interest rate on a 1-year Treasury bond (,R) is 6.50 percent, the current rate on a 2-year Treasury bond (,R2) is 7.25 percent, and the current rate on a 3-year Treasury bond GRa) is 8.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f,? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ,R...
The Robinson Corporation has $27 million of bonds outstanding that were issued at a coupon rate...
The Robinson Corporation has $27 million of bonds outstanding that were issued at a coupon rate of 10.950 percent seven years ago. Interest rates have fallen to 10.250 percent. Mr. Brooks, the Vice-President of Finance, does not expect rates to fall any further. The bonds have 17 years left to maturity, and Mr. Brooks would like to refund the bonds with a new issue of equal amount also having 17 years to maturity. The Robinson Corporation has a tax rate...
HW #10 X Connect - Class: FIN3200 Busine: x M MHE Reader x + -ox o...
HW #10 X Connect - Class: FIN3200 Busine: x M MHE Reader x + -ox o + C newconnect.mheducation.com/flow/connect.html Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question You purchased a zero-coupon bond one year ago for $267.35. The market interest rate is now 5.3 percent. If the band had 25 years lo malurily when you originally purchased it, what was your...
Questions a-e are already complete and correct. Please answer parts f, g, h, i, j1-2, and...
Questions a-e are already complete and correct. Please answer
parts f, g, h, i, j1-2, and k1.
Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $64,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $27,800. A new piece of equipment will cost $154,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for...
a. The cost of a new automobile is $11,900 lf he interest rate is 4%, how...
a. The cost of a new automobile is $11,900 lf he interest rate is 4%, how much would you have to set aside now to provide this sum in four years? Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b, You have to pay $15,000 a year in school fees at the end of each of the next five years. If the Interest rate is 7%, how much do you need to set aside...
change_of_status_fr... Changing to F-1/ F R myRutgers Portal R hent #4 Saved Triad Corporation has established...
change_of_status_fr... Changing to F-1/ F R myRutgers Portal R hent #4 Saved Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $129 million. The equipment will be fully depreciated using the straight-line method over its economic life of five years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $18.8 million per annum for 20 years...
Problem 4-20 Two-stage DCF model Compost Science Inc. (CSI) is in the business of converting Boston's...
Problem 4-20 Two-stage DCF model Compost Science Inc. (CSI) is in the business of converting Boston's sewage sludge into fertilizer. The business is not in itself very profitable. However, to induce CSI to remain in business, the Metropolitan District Commission (MDC) has agreed to pay whatever amount is necessary to yield CSI a 14% book return on equity. At the end of the year, CSI is expected to pay a $5 dividend. It has been reinvesting 40% of earnings and...
CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press fo...
CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $401,000 is estimated to result in $147,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table) and it will have a salvage value at the end of the project of $48,000. The press also requires an initial investment in spare parts inventory of $15,300, along with an additional $2,300 in inventory for each succeeding year...
Bob Jensen Inc. purchased a $400,000 machine to manufacture specialty taps for electrical equipment. Jensen expects...
Bob Jensen Inc. purchased a $400,000 machine to manufacture
specialty taps for electrical equipment. Jensen expects to sell all
it can manufacture in the next 10 years. To encourage capital
investments, the government has exempted taxes on profits from new
investments. This legislation is to be in effect for the
foreseeable future. The machine is expected to have a 10-year
useful life with no salvage value. Jensen uses straight-line
depreciation. The net cash inflow is expected to be $92,000 each...
You have estimated spot rates as follows: ri = 5.00%, r2 = 5.40%, r3 = 5.70%, r4 = 5.90%, rs = 6.00%. a. What are the discount factors for each date (that is, the present value of $1 paid in year 6)? (Do not round intermediate calculations. Round your answers to 3 decimal places.) Year Discount Factors b. Calculate the PV of the following $1,000 bonds assuming an annual coupon and maturity of: (i) 5%, two-year bond; (ii) 5%, five-year...
Assume the current interest rate on a 1-year Treasury bond (,R) is 6.50 percent, the current rate on a 2-year Treasury bond (,R2) is 7.25 percent, and the current rate on a 3-year Treasury bond GRa) is 8.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f,? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ,R...
HW #10 X Connect - Class: FIN3200 Busine: x M MHE Reader x + -ox o + C newconnect.mheducation.com/flow/connect.html Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question You purchased a zero-coupon bond one year ago for $267.35. The market interest rate is now 5.3 percent. If the band had 25 years lo malurily when you originally purchased it, what was your...
Questions a-e are already complete and correct. Please answer
parts f, g, h, i, j1-2, and k1.
Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $64,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $27,800. A new piece of equipment will cost $154,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for...
a. The cost of a new automobile is $11,900 lf he interest rate is 4%, how much would you have to set aside now to provide this sum in four years? Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b, You have to pay $15,000 a year in school fees at the end of each of the next five years. If the Interest rate is 7%, how much do you need to set aside...
change_of_status_fr... Changing to F-1/ F R myRutgers Portal R hent #4 Saved Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $129 million. The equipment will be fully depreciated using the straight-line method over its economic life of five years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $18.8 million per annum for 20 years...
Problem 4-20 Two-stage DCF model Compost Science Inc. (CSI) is in the business of converting Boston's sewage sludge into fertilizer. The business is not in itself very profitable. However, to induce CSI to remain in business, the Metropolitan District Commission (MDC) has agreed to pay whatever amount is necessary to yield CSI a 14% book return on equity. At the end of the year, CSI is expected to pay a $5 dividend. It has been reinvesting 40% of earnings and...
CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $401,000 is estimated to result in $147,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table) and it will have a salvage value at the end of the project of $48,000. The press also requires an initial investment in spare parts inventory of $15,300, along with an additional $2,300 in inventory for each succeeding year...
Bob Jensen Inc. purchased a $400,000 machine to manufacture
specialty taps for electrical equipment. Jensen expects to sell all
it can manufacture in the next 10 years. To encourage capital
investments, the government has exempted taxes on profits from new
investments. This legislation is to be in effect for the
foreseeable future. The machine is expected to have a 10-year
useful life with no salvage value. Jensen uses straight-line
depreciation. The net cash inflow is expected to be $92,000 each...
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