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3 years ago

What is the discounted payback period for these cash flows if the initial cost is $11,800?

1 answer:

3 0

C) initial cost = 11800 

This time it will take you full 4 years

5300/1.13^4 = 3250.59

14855.44 - 8800 = 3055.44 

cash required in year 4 = 3250.59 - 3055.44 = 195.15 

time required in year 4 = 195.15 / 3250.59 = 0.06 

Discounted payback period = year 1 + year 2 + year 3 + 0.06 = 3.06 years

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Exxon has the following capital structure: the firm issued 6 million shares of common stock with the stock price in c), the firm

lesantik [10]

Answer: some data is missing but I was able to find it online and that helped me resolve the problem .

answer : WACC = 15.76%

Explanation:

Given that the common stock price = $9 ( as seen in option C not attached above )

value of common stock = $9 * 6 * 10^6 = $54,000,000

cost of common equity = 10.93%

current preferred stock price = $6

value of preferred stock = $6 * 1,500,000 = $9,000,000

hence the cost of the preferred equity = $4.5 / $6 = 0.75 = 75%

interest rate of debts = 6.5%

value of debit = $25,000,000

Corporate tax rate = 25%

∴ The cost of the debit after tax = 6.5% * ( 1 - 25)% = 4.88%

The Total value = value of common stock + value of preferred stock + value of debit

= 54,000,000 + 9,000,000 + 25,000,00 = $88,000,000

Finally the weighted average cost of capital ( WACC )

[weight of debt * cost of debt after tax ] + [ weight of common equity * cost of common equity ] + [weight of preferred * cost of preferred ]

= [ (25/88) * 4.875 ] + [(54/88) * 10.933] + [ (9/88) * 75 ]

= 15.76%

3 0

2 years ago

High inflation in the United States would most likely have a negative impact on

Alexxx [7]

Answer:

The correct answer is option A.

Explanation:

High inflation will cause an adverse effect on the exchange rate. However, the low inflation rate does not have a positive effect on the value of currency and exchange.

Inflation rate affects the rate of interest which has an effect on the exchange rate. The relationship between the interest rate and inflation is complex and difficult to manage.

Lower interest rates are likely to lower the cost of borrowing. As a result, there is an increase in investment and production. This increases aggregate demand and thus price level.

But lower interest discourages foreign investment, the demand for domestic currency falls.This shift the currency demand curve to left decreasing the interest rate.

5 0

3 years ago

Howard Services, Inc., has $ 8 comma 600 cash on hand on January 1. The company requires a minimum cash balance of $ 7 comma 60

skad [1K]

Answer:

The amount of cash to be borrowed = $18,040

Explanation:

The cash budget shows the expected cash payments and expected cash receipts and cash balance at the end of a particular period.

Note that in the cash budget only items of the cash are considered, therefore items like depreciation, amortization of intangible assets and apportionment of fixed costs are not included because they are not cash based.

The balance at the end = opening cash balance + cash receipts -cash payment

Applying this to Howard Services, Inc.

The amount of cash to be borrowed = Minimum cash balance required - Net cash balance

DATA

Opening cash balance - 8600

Cash receipts- 548,570

Cash payment - 567,610

Net cash balance = 8600 + 548,570 - 567,610 = (10,440)

The amount of cash to be borrowed = 7,600 - (10,440)

=7,600+10,440=18040

The amount of cash to be borrowed = $18,040

Note a negative amount of 10,400 would mean that that would be first borrowed to balance the deficit, and to take the balance to the minimum required cash balance, an addition 7,600 would need to be borrowed.

6 0

3 years ago

A common error made when solving a future value of an annuity problem is: Multiple Choice Using factor tables to help solve the

ivanzaharov [21]

Answer:

Multiplying the annual deposit and the number of years before calculating the problem.

Explanation:

An annuity can be defined as a sequence of payment that is typically made at equal intervals i.e at specific period of time.

Basically, annuity can be calculated using the compound interest formula. It is given by the mathematical expression;

$A = P(1 + \frac{r}{n})^{nt}$

Where;

A is the future value.

P is the principal or starting amount.

r is annual interest rate.

n is the number of times the interest is compounded in a year.

t is the number of years for the compound interest.

Additionally, the time period between each payment is called payment period.

The term of an annuity refers to the time from the beginning of the first payment made by an individual to the end of the last payment period.

A common error made when solving a future value of an annuity problem is multiplying the annual deposit and the number of years before calculating the problem.

5 0

2 years ago

intext:"If a company is considering the purchase of a parcel of land that was acquired by the seller for $85,000, is offered for

valkas [14]

Answer:

the seller must record the land at the purchase price = $137,000

Explanation:

Fixed assets like land must always be recorded at historical cost. This is specially important regarding land because it doesn't depreciate and its carrying value will always be the purchase cost since it cannot be adjusted if the fair market value changes.

8 0

3 years ago