Answer:
At any rate.
Explanation:
The function to calculate the NPV of each project is the same, therefore it is not expected that potential NPV of projects meet in any time in the future, so always would be a project better than the other regardless the discount rate used. In this case, the project B will be always better than project A
Answer:
In order to find the value of a preferred stock we discount its future payments at the required yield on the stock. Because the preferred stock is perpetual in nature, meaning it pays the same amount forever, we can find it's value by dividing its dividend by its required yield. So in this case the dividend is 6.5 and the required yield is 14% so the value of the preferred stock is
6.5/0.14= $46.42
Explanation:
Answer:
Finance lease is as a lease agreement which transfers all the benefits and risks of ownership of the leased asset. A lease is considered as financial lease if it has following characteristics:
It transfers ownership of the asset to the lessee.
It permits the lessee to purchase the asset at the end of the lease period.
Lease term is at least 75% of useful life of the asset.
Present value of lease payment is at least 90% of the fair value of the asset.
The present value of the minimum lease payments ($20.6 million) is greater than 90% of the fair value of the asset $20.16 million (90% x $22 4 million). The lease period is for 8 years which is less than 75% of expected useful life. But, as one condition is met, the lease will be classified as finance lease. Furthermore, it is a sales-type lease with selling profit because the present value of the minimum lease payments($20.6 million) exceeds the lessors cost ($16 million).
