Increase in Contribution Margin
(1,500,000*25%)
$
375,000
Increase in Bad Debt Costs
Before
(8,000,000*2%)
After
(9,500,000*3%)
$
$
160,000
(285,000) $
(125,000)
Increase in Discounts
Before
After
$
$
48,000
(114,000) $
(66,000)
$
$
42,082
(56,219) $
(14,
CHE374F - 2015 Problem Set #5
1. The concept of no free lunch i.e. no arbitrage, is fundamental to finance theory.
Applying the no arbitrage argument, determine the forward foreign exchange rate (FX)
in USD/CAD1 one year from now, if the (one year) contin
CHE374F - 2016 Problem Set #4
1. What would you pay for the following bonds assuming an annual yield rate of 7% based
on semi-annual compounding (assume face value = $100):
a. Zero coupon bond maturing in 3months
b. Zero coupon bond maturing in 5 months
c
CHE374F-2016 Problem Set #10
1. Nick is in charge of operations at XYZ Ltd. He needs to replace one of the robots
used in the manufacturing process. His options are as follows (all based on a 5
year time span):
Price
Installation
Annual Savings
Salvage Pr
CHE374 2015F-Problem Set #09
1) Brand Corp. has the following financial results for the fiscal year 2009 that ended on
December 31, 2010.
Accounts Payables
Accounts Receivable
40,000
55,800
Administrative expenses
Bonds payable (due in 2010)
Building and
1.
20 years, no salvage value, interest rate of 4% per year
Concrete Reservoir
PV Concrete =300,000+14,000 ( P / A ,5 ,20 )+ 0=300,000+14,00012.462=$ 474,468.00
Earthen Dam
8 year effective interest rate is
( 1+0.05 )8=(1+r 8 ) , which means r 8=47.75
PV
CHE374 PROBLEM SET 5
Group 6
Jannis Mei (1000684592)
Chengzhi Liu (1000489269)
Alyf Janmohamed (1000571311)
David Wang (999876353
r cc , rf ,CAD =0.4 , r cc , rf ,USD=0.85 , currently 1CAD=1.055 USD
Can invest $1 CAD at r cc , rf ,CAD which is equivalent
1. Cash Flow Equivalencies
This question essentially asks for the cash flow equivalencies at various points in time, with different
rates of discounting. See Excel File for calculations.
A (PV)
B (FV)
C (PV_4)
D
At 6%
773.54
1097.29
939.27
150.45
At 9 %
6
Step 1: Write out the equation for P as a sum of N payments of A, increasing by (g),
with discounting by i:
2
P=
N 1
A ( 1+ g )
A A (1+ g ) A ( 1+ g )
+
+
+
2
3
N
1+i ( 1+i )
( 1+i )
(1+i )
Step 2: Now we multiply both sides by (1+g):
[
2
( 1+ g ) N
1+ g
1.
r f =2 , r m =6 , XYZ =1,2,CCA rate for robots 20 , consider taxrate=0 ,tax rate=40
r CAPM =2 +1.2( 62 )=2 +1.24 =6.8
5 years
PW savings + P W depreciationP W install (1t)
PW save =Annual Savings(1t )(P / A ,6.8 ,5)
PW install
PW depreciation=FCCCT F N
1.
De facto MARR, Budget of 120,000
[
1( 1+r )n
PV =A( P / A ,i , n )= A
r
]
IRR solved for using Goal Seek. We want to do the projects with the highest IRR first, but out budget is
$120,000, and we cannot go over. With that in mind, we can only do the to
CHE374 PROBLEM SET 4
Group 6
Jannis Mei (1000684592)
Chengzhi Liu (1000489269)
Alyf Janmohamed (1000571311)
David Wang (999876353)
Question 1:
P=
We use the equation
F
C
1
+ 1
n
1+
1+
m
m
(
( )
n
( )
)
a) We use the discounted cash flow, P = 100 * (P/F, 9
CHE374F-2015 Problem Set #6
1. Given the cash flows per year in the table below, determine the value for x to ensure
mathematical equivalency for each of the four scenarios (a-d) if the interest rate is
5%. How would x change if the interest rate were 9%?
CHE374F 2016 Problem Set # 7B
1. The following table lists 10 independent projects a company may invest in. Calculate the
IRR for each project. Rank the projects based on IRR. If the company budget for this
pool of projects is $ 120,000, what would be the
CHE374F 2016 Problem Set # 8
1. A machine purchased for $92,000 has a depreciable life of 4 years. It will have an
expected salvage value of $19,000 at the end of the depreciable life. What would be the
book value of the asset in each if the 4 years if th
JRE 300H1S Foundations of Accounting and
Finance
Instructor: Fotini Tolias
Session 3:
Accrual Concepts
The Cash Flow Statements
Accounting Information Systems
First, lets review key concepts
1.
Revenue Recognition Principle
Revenue must be recognized in
JRE 300H1S Foundations of Accounting and
Finance
Instructor: Fotini Tolias
Session 4: Merchandising Operations & Inventory
Class Matters
Your first assignment has been posted due Monday, October
19th, to be handed in at 44 St. George hard copy submission
JRE 300H1S Foundations of Accounting and
Finance
Instructor: Fotini Tolias
Session 6: Working Capital Management
(Chapter 23- Finance book)
Announcements
Assignment 1
Due on Wednesday, February 10th by 4:00 pm, hard copy to be handed in at
44 St. George
M
JRE 300H1S Foundations of Accounting and
Finance
Instructor: Fotini Tolias
Session 5: Introduction to Managerial Accounting:
Cost Concepts & Allocation
Decision making
Class Matters
Your first assignment has been posted due Wednesday,
February 10th , to
University of Toronto
Faculty of Applied Science and Engineering
Final Examination, December 19th 2012
Third Year Engineering Science
CHE374H1 F Economic Analysis and Decision Making
Calculator Type 1
Exam Type D
Examiner Yuri Lawryshyn
Aids allowed: Text
University of Toronto
Faculty of Applied Science and Engineering
Final Examination, December 10th 2013
Third Year Engineering ScienCe
CHE374H'1 F Economic Analysis and Decision Making
Calculator Type 1
Exam Type D
Examiner Yuri Lawryshyn
. Aids allowed: T
UniverSItyof Toronto
Faculty of Applied Science and Engineering
Final Examination, December 14th 2MB
Third Year Engineering Science
CHEBMHE F Economic Analysis and Decision Making
Calculator Type 1
Exam Type D
Examiner Yuri Lawryshyn
Aids allowed: Text bo
CHE374F 2016 - Problem Set #2
1) The Student Bank of Canada charges an effective 3.4% interest per year on an 8 year
$100,000 loan. Calculate the loans nominal annual interest rate for:
a) Semi-annual compounding
b) Monthly compounding
c) Daily compoundin
CHE374F - 2016 Problem Set #3
1. You are given the following T-bill maturity rates and prices.
Maturity (Months)
T-Bill Price
1
99.52
4
99.01
8
97.64
12
95.85
a) Calculate the yield rates (effective annual and continuously compounding annual) for each Tbi
CHE374F - 2016 Problem Set #1
Question 1
A new steel stirred tank reactor costs $8,000, plus $1,200 for installation.
Currently, the company you work for has a stainless steel unit in the warehouse,
and it could be used in this application. The old reacto
CHE374 PROBLEM SET 3
Group 6
Jannis Mei (1000684592)
Chengzhi Liu (1000489269)
Alyf Janmohamed (1000571311)
David Wang (999876353)
Question 1
a)
P=
C
1
(
1
1+
m
n
)
+
F
1+
m
n
( ) ( )
Excel has a function which can help us solve this: YIELD(Today,Maturity
Q1
Q2
Q3
8 year rate
1.4774554438 0.4774554438
PV
Concrete
474,468.00
Earthen
520,587.00
AC
Long Way (might be wrong)
Concrete
38,071.31
Earthen
41,771.90 42,318.00
PV
Concrete
580000
Earthen
713298.4293194
AC
Concrete
Earthen
Require P of 104
P
lambda
10
Question 1
Year
0
A (PV)
A at 9%
B (FV)
B at 9%
C (PV_4)
C at 9%
D
x/1.06
x/1.06^3
sum of xs
D at 9%
x/1.06
x/1.06^3
sum of xs
1
2
3
4
5
6
Cash Flow
-800
320
320
320
320
320
320
Answers
773.54 B7+C7/(1.06)+D7/1.06^2+E7/1.06^3+F7/1.06^4+G7/1.06^5+H7/1.06^6
Question 1
Suppose you have invested only in two stocks, A and B. You expect that returns on the stocks depend
on the following three states of economy, which are equally likely to happen.
State of Economy Return on Stock A (%) Return on Stock B (%)
Bear