Consider a project to produce solar water heaters. It requires a $10 million investment and offers a level after-tax cash flow of $1.75 million per year for 10 years. The opportunity cost of capital is 12 percent‚ which reflects the project’s business risk. Suppose the project is financed with $5 million of debt and $5 million of equity. The interest rate is 8 percent and the marginal tax rate is 35 percent. The debt will be paid off in equal annual installments
Premium Net present value Finance Interest
QUESTION 1: 1. If the first deposit is at 36 years and the last expected deposit is at 65 years‚ then annual deposits will be made for 30 years. Expected annual withdrawals are $90‚000 for 15 years from the retirement fund with a bank that offers compound interest of 8% annually. Calculation Present value (PV) =? Future value (FV) = (90‚000*15) = $1‚350‚000 Periodic payment amount (PMT) =? Interest rate per period (Rate) = 8% or 0.08 Number of payment periods (Nper) = 30 Using the Excel
Premium Net present value Rate of return Time value of money
Investment in Assets and required returns · Cash flow determination · Non-DCF and DCF techniques Case: Investment analysis and Lockheed Tri Star Assignment Questions 1. Compute the payback‚ net present value (NPV)‚ and internal rate of return (IRR) for this machine. Should Rainbow purchase it? Assume that all cash flows (except the initial purchase) occur at the end of the year‚ and do not consider taxes. 2. For a $500 per year additional expenditure‚ Rainbow can get a "Good As New" service
Premium Net present value Rate of return Internal rate of return
Chapter 06 Discounted Cash Flow Valuation Multiple Choice Questions 1. An ordinary annuity is best defined by which one of the following? A. increasing payments paid for a definitive period of time B. increasing payments paid forever C. equal payments paid at regular intervals over a stated time period D. equal payments paid at regular intervals of time on an ongoing basis E. unequal payments that occur at set intervals for a limited period of time 2. Which one of the following
Premium Interest Compound interest Time value of money
Minicase #17 Electronic Timing‚ Inc. Electronic Timing‚ Inc. (ETI)‚ is a small company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the market for frequency timing generators‚ or silicon timing devices‚ which provide the timing signals or “clocks” necessary to synchronize electronic systems. Its clock products originally were used in PC video
Premium Stock market Stock Financial ratios
To: Milan Bergamo (BGY) NON EU/EEA NO PRIORITY M1MYFTARI/AURON A45P4P SKPBGYW6 7743 352Y000 0105 100 BOARDING PASS MR auron myftari (ADT) Services: ONLINE CHECKIN SMALL CABIN BAG Baggage: Nationality: ID details: K00363198 exp. 09/06/2014 Flight number Flight date Confirmation code W6 7743 18/DEC/2013 (18/12/2013) A45P4P XK From 18:05 To BGY Departure time Milan Bergamo 105 Gate closes Skopje SKP Seq. no: 18:35
Premium European Union Milan
1. Which one of the following is a means by which shareholders can replace company management? A. stock options B. promotion C. Sarbanes-Oxley Act D. agency play E. proxy fight 2. Decisions made by financial managers should primarily focus on increasing which one of the following? A. size of the firm B. growth rate of the firm C. gross profit per unit produced D. market value per share of outstanding stock E. total sales 3. Which one of the following is the financial statement that
Premium Management Stock Balance sheet
FORMULAS TIME VALUE OF MONEY PV (simple without compounding) = FV/1+r FV (simple without compounding) = PV (1+r) PV (compounding) = FV / (1+r)n FV (compounding) = PV (1+r)n PV (for monthly‚ daily or bi-annually basis) = FV / (1+r/m)n*m FV (for monthly‚ daily or bi-annually basis) = PV(1+r/m)n*m To find interest rate: FV = PV (1+r(?))n (FV and PV are given) APR (Annual Present Rate) = r * Total days in a year/given days In Excel: =RATE(n‚pmt‚PV) EAR (Effective Annual Rate)
Premium Time value of money Compound interest
The Scope Of Corporate Finance Professor Dr. Rainer Stachuletz Corporate Finance Berlin School of Economics Finance Career Opportunities Corporate Finance • Budgeting‚ financial forecasting‚ cash management‚ credit administration‚ investment analysis‚ fund procurement Commercial Banking Investment Banking Money Management 2 • Consumer banking • Corporate banking • High income potential • Very competitive industry • Opportunities in investment advisory firms‚ mutual fund companies
Premium Finance Corporate finance Financial market
Joanne Jackson June 1‚ 2011 Corporate Finance 620 M 600-950 Ch. 12 Mini Case A. Do you think Adam Lee should develop a strategic plan for the company? Why? What are the central elements of such a plan? What is the role of finance in a strategic plan? Yes. The goal of companies is to create more wealth for the owners and for financial managers to make their company more valuable and without well designed strategic and tactical plans in place it is impossible to do. The central
Premium Finance Balance sheet Dividend