Consider the following

Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. The

Sedbober [7]

Answer:

$-7033.54

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator

Cash flow = net income + deprecation

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($45,300 - $7,500) / 3 = $12,600

Cash flow = $12,600 + $2000 = $14,600

Cash flow in year 0 = $-45,300

Cash flow in year 1 = $14,600

Cash flow in year 2 = $14,600

Cash flow in year 3 = $14,600 + $7,500 = $22,100

I = 15%

NPV = $-7033.54

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

5 0

3 years ago

To create a portfolio with duration of 4 years using a 5 year zero-coupon bond and a 3 year 8% annual coupon bond with a yield t

vovikov84 [41]

Answer:

One would have to invest 55%

Duration of 3-year bond is 2.78

Then 5wZ + 2.78(1 - wZ) = 4

2.22wZ = 1.22

wZ = .5495

Explanation:

To properly understand the concept behind the above calculation, let us define some basic concept:

Portfolio: This can be refereed to as a phrase in finance. It refers to the collection on investment that is being held by an investment company, a financial institution such as a bank ,persons or an individual.

Zero coupon bond: A zero-coupon bond is a bond where the nominal or return on investment (ROI) value is repaid at the time of maturity. This definition usually reflects a positive time value of money.

We should also recall that the formula for zero coupon bond as:

price = M / (1 + i)^n

where: M = maturity value

i = required interest yield divided by 2

Applying this formula, we were able to arrive at the investment percentage.

5 0

3 years ago

Is zero economic profit inevitable in the long run for monopolistically competitive firms? in the long run, monopolistically com

iogann1982 [59]

Firms usually engage in a lot of activates for profit. Zero economic profit may continue to earn profit by reducing costs.

A monopolistic competitor, like some organizations often earn profits in the short run. The entry of some firms into the same market can bring about a shift in the demand curve faced by a monopolistically competitive firm.

When economic profit is zero, an organization is known to be earning the same as when its resources were used in the next best alternative.

See full question below

Is zero economic profit inevitable in the long run for monopolistically competitive firms? In the long run, monopolistically competitive firms

A. will not continue to earn profit because the cost of production will rise as new firms enter the market.

B. may continue to earn profit by convincing consumers their products are different.

C. will continue to earn profit due to barriers to new firms entering the market.

D. may continue to earn profit by instead beginning to produce a product identical to competitors.

E. will not continue to earn profit because monopolistically competitive firms produce identical products.

Learn more from

brainly.com/question/14406708

6 0

2 years ago

What can you bring to our police department to make you a valuable asset to us?

Serjik [45]

Videotapes, Physical evidence (something with possible DNA), Pictures.

8 0

3 years ago

Caliber Corp. currently pays no dividends because it requires its internally generated funds be used to fund a research intensiv

Andreyy89

Answer:

Do = $2.00

D1= Do(1+g)1 = $2(1+0.2)1 = $2.40

D2= Do(1+g)2 = $2(1+0.2)2 = $2.88

D3= Do(1+g)3 = $2(1+0.2)3 = $3.456

D4= Do(1+g)4 = $2(1+0.2)4 = $4.1472

D5= Do(1+g)5 = $2(1+0.2)5 = $4.97664

PHASE 1

V1 = D1/1+ke + D2/(1+ke)2 + D3/(1+ke)3 +D4/(1+ke)4 + D5/(1+ke)5

V1 = 2.40/(1+0.15) + 2.88/(1+0.15)2 + 3.456/(1+0.15)3 + 4.1472/(1+0.15)4 + 4.97664/(1+0.15)5

V1 = $2.0870 + $2.1777 + $2.2723 + $2.3712 + $2.4742

V1 = $11.3824

PHASE 2

V2 = DN(1+g)/ (Ke-g )(1+k e)n

V2 = $4.97664(1+0.02)/(0.15-0.02)(1+0.02)5

V2 = $5.0762/0.1435

V2 = $35.3742

Po = V1 + V2

Po = $11.3824 + $35.3742

Po = $46.76

Explanation: This is a typical question on valuation of shares with two growth rate regimes. In the first phase, the value of the share would be obtained by capitalizing the dividend for each year by the cost of equity of the company. The dividend for year 1 to year 5 was obtained by subjecting the current dividend paid(Do) to growth rate. The growth rate In the first regime was 20%.

In the second phase, the value of shares would be calculated by taking cognizance of the second growth rate of 2%. In this phase, the last dividend paid in year 5 would be discounted at the appropriate discount rate after it has been adjusted for growth.

5 0

3 years ago