25) What is the present value of the following set of cash flows, discounted at 15% per year? Year 1 2 3 4 CF $100 -$100 $200 -$200 A. $27.77 B. $28.49 C. $29.12 D. $30.63

Q: Company A will pay a dividend at the end of each year at 150Php for the next 3 years for Stock A…

A: Share price: Share price is the current market price of the share. It is the price of the share at…

Q: An initial investment of $12,000 on an Artificial Intelligence (AI) powered cyber defense project is…

A: Net Present Value is the difference between present value of cash inflows and cash outflows. At IRR,…

Q: moderale curent asset inveatment policy, but it is now considering a change, perhaps to a restricted…

A: Answer-    1. Restricted policy where current assets are 20% of sales.   Sales = $400,000 Current…

Q: What is the yield to maturity of a bond that pays an 5.02% coupon rate with annual coupon payments,…

A: Solution:- Yield to maturity (YTM) means the annual rate of return provided by the bond, if the bond…

Q: Oscar was given a credit card with an APR of 21%. What was his monthly periodic rate? A. 21% B. 2.1%…

A: APR is annual rate of return calculated considering 12 months credit  period. To calculated monthly…

Q: School fees at a certain school are due at the beginning of the year. The fees are set at R12000 for…

A: This question can be answered in light of time value of money. The time value of money is a concept…

Q: 1. A Machine costs P80,000 and an estimated life of 10 years with a salvage value of P5,000. What is…

A: Depreciation can be defined as the reduction in the value due to wear and tear in asset over a…

Q: VAN DER LINDE CORPORATION have been operating since 2011 and have not issued any new shares since…

A: Gross Profit ratio can be calculated as: = Gross Profit/ Net Sales * 100 and Cost of goods sold…

Q: The cost of fixed assets is distributed over the asset's estimated lifetime. This spreading of costs…

A: Fixed Asset: It is a long-term asset and is tangible in nature. Such assets are used by the firm to…

Q: MMB issued 10-year bonds with a coupon rate of 8%.  The bond makes semiannual payments.  If these…

A: Band is a financial instrument that pays a series of equal payments at equal interval till the…

Q: For example, you are a portfolio manager, and you get to select your pick of clients (individual or…

A: As a portfolio manager, the pick would be individual investor and sub class would be HNWIs. HNWIs or…

Q: Explain, in no more than 100 words, how investors’ degree of risk tolerance influences the choice of…

A: Expected Rate of return = 12% Standard Deviation = 16%

Q: advantages and disadvantages of regulatory forbearance in banking. How useful has it been in…

A: Regulatory forbearance is the regulators' refusal to exercise their right to close down an insolvent…

Q: Long Life Floors is expected to pay an annual dividend of $8 a share and plans on increasing future…

A: Value of stock is Sum of all dividend paid discounted at cost of capital

Q: Advanced Products is considering the purchase of a computer-aided manufacturing system that requires…

A: Solution:- Present value means value in today’s terms.

Q: You buy a 10-year $1,000 par value 4.60% annual-payment coupon bond priced to yield 6.60%. You do…

A: Face Value = 1000 Coupon rate = 4.60% Yield to maturity = 6.60% Tax rate = 15%

Q: he bonds issued by United Corp. bear a coupon of 5 percent, payable semiannually. The bond matures…

A: We need to use RATE function in excel to calculate yield to maturity(YTM).The formula is…

Q: The Cookie Jar bakes 80 dozen cookies at a cost of $1.08 per dozen. If a markup of 60% on selling…

A: Solution:- We know, markup stands for the percentage margin added either on cost or sales price.

Q: Blue Bell stock is expected to return 23 percent in a boom, 16 percent in a normal economy, and lose…

A: Expected Return  (E(X)) = 0.23*0.05 + 0.16*0.90 - 0.32*0.05  = 0.0115 + 0.144 - 0.016 = 0.1395

Q: 4. Which of the following is definitely not eligible for like- kind exchange treatment under I.R.C.…

A: Like kind exchange treatment under section 1031 is all about exchanging or swapping same kind of…

Q: Ryan Ltd recently paid an annual dividend of $1.5 per share. Investors expect that the company will…

A: Share value = Present value of high growth dividends + Present value of stable growth dividends…

Q: A company estimates that a certain piece of machinery will have to be replaced in five years' time…

A: Future value of growing annuity (due) = [P/(r-g)] *((1+r)^n - (1+g)^n / (r-g))P = Initial payment =…

Q: An investment of $1,600,000 will return $320,000 per year for 6 years. Should the investment be…

A: Payback period refers to the time period within which a certain investment may be recovered. It is a…

Q: he nominal rate of return is ______% earned by an investor in a bond that was purchased for $906,…

A: Nominal rate of return of the bond is the sum of coupon payment and price difference in bond Nominal…

Q: A Treasury bond that settles on October 18, 2019, matures on March 30, 2038. The coupon rate is 5.70…

A: Macaulay duration and modified duration both measure the bond's price sensitivity to the change in…

Q: Assume BBB stock price is currently $20. In each six-month period, it will either fall by 50 percent…

A: Asset price $20.00 Strike price $15.00 Time/step,  1.00 yrs Risk free rate, r 5% for 6 Months

Q: A 9,000 bond, redeemable at par, pays interest at 5% to yield the purchaser 4%, quarterly for 2…

A: A Bond refers to an instrument that represents the loan being made by the investor to the company…

Q: ssignment Question : XZ Company is medium sized metal fabricator that is currently contemplating two…

A: Capital budgeting decision refers to the long term decision that is used to determine whether that…

Q: JL Bank offers a business loan with an initial amount of 6,000,000 pesos at a rate of 3% compounded…

A: Loan Amortization: It is the most common way of scheduling out  a fixed-rate credit into equivalent…

Q: Show that the Ricardian Equivalence does not necessarily hold if the assumption of perfect credit…

A: Ricardo's equivalence is an economic theory that states that funding government spending from…

Q: In 2021, a company issued 6% bonds with a maturity value of P40,000, together with 1,000 shares of…

A: Increase in share premium as a result of this transaction will be Amount allocated to ordinary…

Q: You just won a prize that comes with two payout choices. The first option is to get $130,000 right…

A: For evaluating which proposal out of the given options is better, present worth of the cash flows…

Q: Suppose that five years ago a corporation issued a 9-year bond with a coupon rate of 6.50% and the…

A: Bond price With coupon payment (C), period (n), yield (r) and face or par value (F), the bond price…

Q: 9. A project has an NPV of $12 632 when its cost of capital is 12 percent, and an NPV of $6 935 when…

A: To evaluate different projects, we make use of capital budgeting tools. Some of the capital…

Q: If both deals fail, then A will have a more negative return than B.

A: Merger arbitrage refers to the business in which stocks are traded by the companies which are…

Q: Data suggests that Stock A of Company Malakas have been consistently growing at a rate of 5% for the…

A: Share Price is the sum of all cash inflows discounted at cost of capital Share Price = Dividend for…

Q: Sy Co. has the collection schedule of 65% during the month of sales, 15% the following month, and…

A: Collections in a month = (0.65 * Current month sale) + (0.15 * Last month sale) + (0.15 * month…

Q: In a public corporation, the agency conflict is: O the exploitation of the workers by the owners O…

A: Solution:- Agency conflict is the conflict between the principal and its agent.

Q: John wants to buy a property for USD 105,000 and once on 80% loan for USD 84000. A lender indicates…

A: Property Price  $    1,05,000.00 Loan  80% Loan Value  $       84,000.00 loan origination fee…

Q: Joe Levi bought a home in Arlington, Texas, for $141,000. He put down 25% and obtained a mortgage…

A: First we need to calculate monthly payment by using PMT function in excel.  Monthly payment…

Q: A stock has n HPR of 16%. The stock's beta is 0.83. The risk-free rate is 1% and the market risk…

A: Stock's beta (b) = 0.83 Risk free rate (Rf) = 0.01 Market risk premium (Mp) = 0.0525 HPR (Actual…

Q: |Company 2019 Gross Revenue $4,250,000| Company 2019 Gross $1,628,000| Profit Annual 58% Retention…

A: Customer lifetime value (CLV) is a measure of the average customer's revenue generated over their…

Q: Private banking is the provision of wealth management services to high net worth individuals who…

A: High net-worth individuals are individuals having investible amounts exceeding a specified limit.…

Q: If US national income declined while it remained stable in Japan, then US trade deficit with Japan…

A: When a country's imports exceed its exports over a given time period, it has a trade deficit.…

Q: Suppose that a two-factor model, where the factors are the market return and the growth rate of…

A: With risk premium of factor 1 (RP1), risk premium of factor 2 (RP2), sensitivity of portfolio to…

Q: A project requires a $34,000 initial investment and is expected to generate end-of-period annual…

A: Solution:- Net Present Value (NPV) means the net present value of cash inflows after adjusting…

Q: Lukow Products is investigating the purchase of a piece of automated equipment that will save…

A: Net Present value is present value of cash flow minus initial investment

Q: Mary bought a bike payable monthly for 10 months starting at the end of the month. How much is the…

A: Mortgage is a loan to buy an asset. The cost of the asset will be paid in equal instalments of…

Q: With i = 15% and n = 10, what is the uniform annual cost if initial cost is P25k and decrease of…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.