Focus Drilling Supplies has been growing steadily over the last 20 years. With increased exploration in...
Project Case: Focus Drilling Focus Drilling Supplies has been growing steadily over the last 20 years. With increased exploration in the mining sector, the company has decided to expand their facilities for supplies and custom drill bit production to meet the increased demand. The expansion will occur over 4 years and is expected to require $2.8 million. Management has developed a payment plan for carrying out this expansion. The plan requires a cash input of $300,000 now, $700,000 one year...
Focus Drilling Supplies has been growing steadily over the last 20 years. With increased exploration in the mining sector, the company has decided to expand their facilities for supplies and custom drill bit production to meet the increased demand The expansion will occur over 4 years and is expected to require $2.8 million. Management has developed a payment plan for carrying out this expansion. The plan requires a cash input of $300,000 now, $700,000 one year from now, $800,000 two...
Simone is now 50 years old and plan to retire at age 67 (in 17 years). She currently has a share portfolio worth $750,000, a superannuation fund worth $1,200,000, and a money market (similar to cash) account worth $500,000. Her share portfolio is expected to provide annual returns of 12% p.a. (compounded annually), her superannuation will earn her 9% p.a. (compounded annually), and the money market account earns 1.2% p.a. (compounded monthly). Assume all these returns are aftertax. Assume Simone’s...
Simone is now 50 years old and plan to retire at age 67 (in 17 years). She currently has a share portfolio worth $750,000, a superannuation fund worth $1,200,000, and a money market (similar to cash) account worth $500,000. Her share portfolio is expected to provide annual returns of 12% p.a. (compounded annually), her superannuation will earn her 9% p.a. (compounded annually), and the money market account earns 1.2% p.a. (compounded monthly). Assume all these returns are aftertax. Assume Simone’s...
Simone is now 50 years old and plan to retire at age 67 (in 17 years). She currently has a share portfolio worth $750,000, a superannuation fund worth $1,200,000, and a money market (similar to cash) account worth $500,000. Her share portfolio is expected to provide annual returns of 12% p.a. (compounded annually), her superannuation will earn her 9% p.a. (compounded annually), and the money market account earns 1.2% p.a. (compounded monthly). Assume all these returns are aftertax. Assume Simone’s...
A company took a loan which requires a payment of $40 million plus interest two years after the loan's date of issue. The interest rate on the $40 million face value is 9.6% compounded quarterly. Before the maturity date, the lender sold the loan contract to a pension fund for $43 million. The sale price was based on a discount rate of 8.5% compounded semi-annually from the date of sale. The sale took place months before the maturity date of...
GENERAL ANNUITY Instruction: Solve the given situations. Show your solutions (5 points each). 1. Soledad decides to save P2,700 at the end of every 6 months, which is the amount paid into her retirement plan by the company where she works. If she chooses an investment fund that guarantees 8% per year compounded quarterly, how much will she have in 10 years? 2. What is the present value of an annuity of P7,300 per semi-annual period for 7 years at...
You wish to buy a house five years from now, which will expectantly cost $550,000 after five years. You will pay parts of this price from your personal deposit. You will cover the rest of the purchase price by taking two types of loans at the time of purchase: a 4-year fixed-interest personal loan of $20,000 - a 25-year fixed-interest house loan for the rest of the house price (.e. after paying from the personal deposit and the $20,000 taken...
A construction company has for sale a heavy duty drilling machine. The company has found a buyer willing to pay either R50 000 now or a series of cash flow shown in the Table below: Year Payment 1 R8 000 R9 000 3 R12 000 R16 000 R20 000 The company plans to invest any received payments in an account that earns 10% annual interest. The company intends to buy a more sophisticated drilling machine in 5 years from now...
(b) GMX Ltd is a fast growing company. The company expects to grow at a rate of 20% in the first two years, and then by 11% for the next three years. Followed by this, the company is expected to settle to a constant growth rate of 4%. The first dividend is expected to be paid next year and will be equal to $4. What is the current price of this share, given that an investor's required rate of return...