1. The direct materials quantity standard should A) exclude unavoidable waste. B) exclude quality considerations. C) allow for normal spoilage. D) always be expressed as an ideal standard. Use the following to answer questions 2-4: Stiner Company has a materials price standard of $2.00 per pound. Five thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 5‚000 pounds‚ although the standard quantity allowed for the output
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CHAPTER 2 How to Calculate Present Values Answers to Problem Sets 1. If the discount factor is .507‚ then .507*1.126 = $1 2. 125/139 = .899 3. PV = 374/(1.09)9 = 172.20 4. PV = 432/1.15 + 137/(1.152) + 797/(1.153) = 376 + 104 + 524 = $1‚003 5. FV = 100*1.158 = $305.90 6. NPV = -1‚548 + 138/.09 = -14.67 (cost today plus the present value of the perpetuity) 7. PV = 4/(.14-.04) = $40 8. a. PV = 1/.10 = $10 b. Since the perpetuity
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NET PRESENT‚ VALUE‚ MERGERS AND ACQUISTIONS TRIDENT UNIVERSITY INTERNATIONAL AVIE MARIE JOHNSTONE STRATEGIC CORPORATE FINANCE FIN501 MODULE 5 CASE ASSIGNMENT PROFESSOR WALTER WITHAM
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1. Basic present value calculations Calculate the present value of the following cash flows‚ rounding to the nearest dollar: a. A single cash inflow of $12‚000 in five years‚ discounted at a 12% rate of return. b. An annual receipt of $16‚000 over the next 12 years‚ discounted at a 14% rate of return. c. A single receipt of $15‚000 at the end of Year 1 followed by a single receipt of $10‚000 at the end of Year 3. The company has a 10% rate of return. d. An annual receipt of $8‚000 for three
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730) (3‚075) (4‚590) Net cash flow $6‚020 $5‚175 $10‚710 Discount factor (6%) .943 .890 Present value $6‚020 $4‚880 $9‚532 NPV $20‚432 11. a. Year 0 Year 1 Year 2 Year 3 Year 4 Before-tax cash flow $(500‚000) $52‚500 $47‚500 $35‚500 $530‚500 Tax cost (7‚875) (7‚125) (5‚325) (4‚575) After-tax cash flow 44‚625 40‚375 30‚175 525‚925 Discount factor (7%) .935 .873 .816 .763 Present value $(500‚000) $41‚724 $35‚247 $24‚623 $401‚281 NPV $2‚875 Investor W should
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Time Value of Money Exercise 1. If you invest $1000 today at an interest rate of 10% per year‚ how much will you have 20 years from now‚ assuming no withdrawals in interim? 2. a. If you invest $100 every year from the next 20 years starting one year from today and you earn interest of 10% per year‚ how much will you have at the end of the 20 years? b. How much must you invest each year if you want to have $50000 at the end of the 20 years? 3. What is the present value of the following
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grow to what amount at the end of three years? (A) (B) $251.94 (C) $380.75 (D) 2. $158.80 $253.06 Bill plans to fund his individual retirement account with the maximum contribution of $2‚000 at the end of each year for the next 20 years. If Bill can earn an effective return of 12 per cent per annum on his contributions‚ how much will he have accumulated at the end of twenty years‚ rounded to the nearest dollar? (A) (B) $19‚292 (C) $144‚105 (D) 3. $14‚938
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managers Chapter 7— Net Present Value and Other Investment Question 1 : List the methods that a firm can use to evaluate a potential investment. There are discounted and non-discounted cash-flow capital budgeting criteria to evaluate proposed investments. They are 1) Net present value: NPV is a discounted cash flow technique‚ which is the difference between an investment’s market value and its cost. NPV = Present value of cash inflow- Present value of cash outflow The
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Chapter 6 | Capacity Planning | | TRUE/FALSE 1. Capacity is the maximum rate of output of a process. Answer: True Reference: Introduction Difficulty: Easy Keywords: capacity‚ maximum output rate 2. Capacity decisions should be made separate from strategic decisions. Answer: False Reference: Introduction Difficulty: Moderate Keywords: capacity decision‚ strategic decisions 3. Capacity can be expressed by output or input measures
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1. You are considering the following two mutually exclusive projects. The crossover point is _____ percent. [pic] A. 11.89 B. 13.75 C. 9.25 D. 12.08 E. 7.76 BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 008 #89 SECTION: 8.4 TOPIC: NPV PROFILE TYPE: PROBLEMS 2. M&A‚ Inc. maintains a constant debt-equity ratio of .4. The firm had net income for the year of $140‚000 and paid $98‚000 in dividends
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