The president's executive jet is not fully utilized. You judge that its use by olher officers...
The president's executive jet is not fully utilized. You judge that its use by other officers would increase direct operating costs by only $21,000 a year and would save $100,000 a year in airline bills. On the other hand, you believe that with the increased use the company will need to replace the jet at the end of three years rather than four. A new jet costs $1.18 million and (at its current low rate of use) has a life...
alue The president's executive jet is not fully utilized. You judge that its use by other officers would increase direct operating costs by only $36,000 a year and would save $100,000 a year in airline bills. On the other hand, you believe that with the increased use the company will need to replace the jet at the end of three years rather than four. A new jet costs $1.26 million and (at its current low rate of use) has a...
Please, I won't get a and b
right. Thank you!
Problem 6-31 Equivalent annual costs The president's executive jet is not fully utilized. You judge that its use by other officers would increase direct operating costs by only $22,000 a year and would save $100,000 a year in airline bills. On the other hand, you believe that with the increased use the company will need to replace the jet at the end of three years rather than four. A new...
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...
You will receive $100 from a zero-coupon savings bond in 3 years. The nominal interest rate is 7.80%. a. What is the present value of the proceeds from the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present Value: b. If the inflation rate over the next few years is expected to be 2.80%, what will the real value of the $100 payoff be in terms of today’s dollars? (Do not round intermediate calculations. Round...
You will receive $100 from a zero-coupon savings bond in 3 years. The nominal interest rate is 8%. a. What is the present value of the proceeds from the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the inflation rate over the next few years is expected to be 3%, what will the real value of the $100 payoff be in terms of today’s dollars? (Do not round intermediate calculations. Round your answer...
You will receive $100 from a zero-coupon savings bond in 4 years. The nominal interest rate is 8.20%. a. What is the present value of the proceeds from the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the inflation rate over the next few years is expected to be 3.20%, what will the real value of the $100 payoff be in terms of today’s dollars? (Do not round intermediate calculations. Round your answer...
An investment offers the following yearly payments. Year Cash Flow 1 $ 1,110 2 970 3 1,500 4 1,860 Requirement 1: If the discount rate is 10 percent, what is the present value of these cash flows? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value $ Requirement 2: What is the present value at 18 percent? (Enter rounded answer as directed, but do...
The total market value of the common stock of the Okefenokee Real Estate Company is $13 million, and the total value of its debt is $8.2 million. The treasurer estimates that the beta of the stock is currently 1.7 and that the expected risk premium on the market is 8%. The Treasury bill rate is 3%. Assume for simplicity that Okefenokee debt is risk-free and the company does not pay tax. a. What is the required return on Okefenokee stock?...
Blitz Industries has a debt equity ratio of 1.5. Its WACC is 77 percent, and its cost of debt! is 5.4 percent. The corporate tax rate is 25 percent. a. What is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded...