Answer:
11.89%
Explanation:
You can use a financial calculator to find the yield to maturity of the 2 year -zero coupon bond. Input the following;
Time to maturity; N= 2
Face value of the bond ; FV = 100
Annual coupon payments; PMT = 0 (since it's a zero-coupon bond)
Present value or price of the bond; PV = -79.88
Next, compute the annual interest rate; CPT I/Y = 11.89%
Therefore, the yield to maturity of the 2-year zero-coupon bond is 11.89%
He starts to slowly realize what he's done and slip into madness and depression. He starts understanding how much evil he's committed and it doesn't suit him, and it all climaxes when he discovers who the man not born of a woman is and how the forest is moving.
Answer:
the company should buy and install the press because the NPV of the project is positive ($73,133.75)
Explanation:
the MACRS 5 year depreciation:
- $375,000 x 20% = $75,000
- $375,000 x 32% = $120,000
- $375,000 x 19.2% = $72,000
- $375,000 x 11.52% = $43,200
- $19,800, since salvage value at year 5 is $45,000
- $0 x 5.76% = $0
salvage value $45,000
total initial investment = $375,000, discount rate = 11%
- cash flow year 1 = {($142,000 - $15,000 - $75,000) x (1 - 34%)} + $75,000 = $109,320
- cash flow year 2 = {($142,000 - $2,000 - $120,000) x (1 - 34%)} + $120,000 = $133,200
- cash flow year 3 = {($142,000 - $2,000 - $72,000) x (1 - 34%)} + $72,000 = $116,880
- cash flow year 4 = {($142,000 - $2,000 - $43,200) x (1 - 34%)} + $43,200 = $107,088
- cash flow year 5 = {($142,000 - $2,000 - $19,800) x (1 - 34%)} + $19,800 + $45,000 = $144,132
the NPV of the project = -$375,000 + $109,320/1.11 + $133,200/1.11² + $116,880/1.11³ + $107,088/1.11⁴ + $144,132/1.11⁵ = $73,133.75
Machinery repairs, property taxes, salaries for workers variable: number of workers, what crop is being produced, gas for machinery.
