Example 1 Suppose you have $2000 to invest. You will not touch it foe the next 35 years. It will accrue 10% interest compounded quarterly. How much will you have in 35 years. FV= what we are looking for P=2000 n=35*4 i=.10/4
Your company is considering two mutually exclusive project projects, X and Y, whose cost and cash flow are shown below: Year x Y 0 (1,000) (1,000) 1 100 1000 2 300 100 3 400 50 4 700 50 The projects are equally risky, and their cost of capital is 12%. You must make a...
Meltzer Electronics estimates that its total fi nancing needs for the coming year will be $ 34.5 million. During the coming fi scal year, the fi rm s re-quired fi nancing payments on its debt- and- equity fi nancing will total $ 12.9 million. The fi rm s fi nancial manager estimates that...
A corporate bond maturing in 20 years with a coupon rate of 8.9 percent was purchased for $980. (a) What is its current yield? (b) What will be its selling price if comparable market interest rates drop 2 percent in two years? (c) Calculate the bond's Yield to Maturity.
reduce need to issue new common stock
what is the difference between (health care finance and economics) And (finance and economics).
REPLACEMENT ANALYSIS The Chang Company is considering the purchase of a new machine to replace an obsolete one. The machine being used for the operation has both a book value and a market value of zero; it is in good working order, however, and will last physically for at least another 10 years....
Hi, I was wondering if you could help me with any of these questions. thanks
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: you must make a recommendation, and you must base it on the modified IRR,(MIRR) what is the MIRR of the better project Your company is considering two mutually exclusive projects, X...
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1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10