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3 years ago

What is the yield to maturity (YTM) on a simple loan for $1,500 that requires a repayment of $15,000 in five years’ time?

Business

1 answer:

makkiz [27]3 years ago

8 0

Answer:

Yield to maturity = 58.5%

Explanation:

The yield to maturity on the loan can be worked out using the Future value of a lump sum formula.

The future value of a lump sum is the amount it would amount to if interest is earned and compounded at a certain interest rate.

The formula is

FV = PV × (1+r)^(n)

PV = Present Value- 1,500

FV - Future Value, - 15,000

n- number of period- 5=

r- yield to maturity ?

15,000 = 1,500× (1+r)^(5)

(1+r)^(5) =15,000/1,500 =10

(1+r)^(5) =10

1+r = 10^(1/5)

r= 10^(1/5) -1 = 0.5848

r = 0.5848 × 100 = 58.5%

r=58.5%

Yield to maturity = 58.5%

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A public works department in a metropolitan area is looking into buying a major equipment to enhance productivity. The initial c

NARA [144]

Answer:

B. The payback is approximately three years

Explanation:

The computation of payback period for this equipment purchase is shown below:-

Year Cash flow Cumulative cash flow

0 -$600,000 -$600,000

1 $250,000 -$350,000

2 $200,000 -$150,000

($250,000 - $50,000)

3 $150,000 0

($200,000 - $50,000)

4 $100,000 $100,000

($150,000 - $50,000)

5 $50,000 $150,000

($100,000 - $50,000)

Here, Cumulative cash flow in the year o is -$600,000 and as we can see that cumulative cash flow in year 3 is 0.

Therefore the payback period lies in 3 years.

7 0

3 years ago

Assume that Cane normally produces and sells 62,000 Betas and 82,000 Alphas per year. If Cane discontinues the Beta product line

Talja [164]

Answer:

Please find the complete question in the attachment.

Explanation:

$\beta$ the margin of contribution unit $= 130-25-22-17-14 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ =52$

$\alpha$ Margin Contribution Unit $= 90-10-21-7-10\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ = 42$

Contribution losses $=62000\times 42 \ \ \ \ \ \ \ \ \ \ \ \ = -2604000$

Fixed cost avoidable $=102000\times 20 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ = 2040000$

The margin of Alpha contributions $=17000\times 52 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ =884000$

Fiscal benefits (disadvantage) $= 320000$

3 0

3 years ago

Larson Company on July 15 sells merchandise on account to Stuart Co. for $1,000, terms 2/10, n/30. On July 20 Stuart Co. returns

pickupchik [31]

Answer:

b. $588

Explanation:

Terms 2/10, n/30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

When Larson Company sold merchandise, the following entry was made to recording revenue (sales) and the receivable:

Debit Receivable Account $1,000

Credit Revenue $1,000

On July 20 Stuart Co. returns merchandise, the entry is made to record the decreasing of Receivable Account:

Debit Revenue $400

Credit Receivable Account $400

The balance Receivable Account of Stuart Co. = $1000-$400 = $600

On July 24, Stuart Co. makes the payment, the sales discount was:

$600 x 2% = $12

The amount of cash received = $600-$12=$588

The following entry is made:

Debit Cash: $588

Debit Sales discount: $12

Credit Receivable Account $600

7 0

3 years ago

Adams, Incorporated would like to add a new line of business to its existing retail business. The new line of business will be t

Alekssandra [29.7K]

Answer:

machine's cost = $200,000 + $10,000 + $30,000 = $240,000

useful life of 4 years

salvage value of $25,000, depreciable value = $215,000

MACRS 3-year asset:

0.333 x $215,000 = $71,595
0.445 x $215,000 = $95,675
0.148 x $215,000 = $31,820
0.074 x $215,000 = $15,910

incremental sales of 1,250 units per year, during 4 years:

1,250 x $200 = $250,000
1,250 x $206 = $257,500
1,250 x $212.18 = $265,225
1,250 x $218.55 = $273,188

incremental COGS of 1,250 units per year, during 4 years:

1,250 x $100 = $125,000
1,250 x $103 = $128,750
1,250 x $106.09 = $132,613
1,250 x $109.27 = $136,588

net working capital increases by 12% of sales revenue = $250,000 x 12% = $30,000

WACC = 10%

tax rate = 40%

initial investment = $240,000 (machine cost) + $30,000 (working capital) = $270,000

net cash year 1 = [($250,000 - $125,000 - $71,595) x (1 - 40%)] + $71,595 = $103,638
net cash year 2 = [($257,500 - $128,750 - $95,675) x (1 - 40%)] + $95,675 = $115,520
net cash year 3 = [($265,225 - $136,588 - $31,820) x (1 - 40%)] + $31,820 = $92,295
net cash year 4 = [($273,188 - $136,588 - $15,910) x (1 - 40%)] + $15,910 = $88,324 + $25,000 (salvage value) + $30,000 (net working capital) = $143,324

to calculate the present value:

PV = $103,638/1.1 + $115,520/1.1² + $92,295/1.1³ + $143,324/1.1⁴ = $94,216 + $95,471 + $69,343 + $97,892 = $356,922

NPV = $356,922 - $270,000 = $86,922

4 0

4 years ago

Zach is employed by Scott Paper Company and is a key account manager on the WalMart team based in Bentonville, AR so he can be n

Travka [436]

Answer: d. channel captain

Explanation:

Channel captains as the term implies, are in charge of a good's distribution channel such that they are to coordinate things to ensure that the good keeps being traded efficiently.

They are responsible for coordinating vendors, and maintaining relationships necessary to keep the good moving. They are also to report on their activities with a view towards expansion. This is what Zach does therefore he is a channel captain.

6 0

3 years ago