Answer:
A) $560 million
Explanation:
First lets calculate the NPV of the cash stream by this investment,
PV Cash stream = Cash flow/ (r-g), where r = avg cost of capital and g = growth of the cash stream.
PV = 50 / (0.09 - 0.04) = $1000 million
We assume that external finance issuance costs are payable as a part of initial outlay of the project and so,
Total initial outlay = 420 + 20 = $440 million
NPV of the project then,
NPV = 1000 - 440 = $560 million
Hope that helps.
Answer:
The cash balance on November 30 amounts to $155,700
Explanation:
Cash balance on November 30 = Beginning balance + Collection of cash from October sales + Collection of cash from November sales - Payments for October Purchases - Payments for November Purchases
where
Beginning balance is $13,700
Collection of cash from October sales = October Sales × % amount collected
= $240,000 × 70%
= $168,000
Collection of cash from November sales = November Sales × % amount collected
= $240,000 × 1.20 × 25%
= $72,000
Payments for October Purchases = October Purchases × % amount paid
= $70,000 × 65%
= $45,500
Payments for November Purchases = November Purchases × % amount paid
= $150,000 × 35%
= $52,500
Putting the values in the above formula
Cash balance on November 30 = $13,700 + $168,000 + $72,000 - $45,500 - $52,500
= $155,700
Answer:
Instructions are below.
Explanation:
Giving the following information:
Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart will receive payments for 30 years. The discount rate is 9 percent, compounded monthly.
To calculate the present value, first, we need to determine the final value.
i= 0.09/12= 0.0075
n= 30*12= 360
<u>Martha:</u>
FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}
A= montlhy payment
FV= {200*[(1.0075^360)-1]}/0.0075 + {[200*(1.0075^360)]-200}
FV= 366,148.70 + 2,746.12
FV= 368,894.82
Now, the present value:
PV= FV/ (1+i)^n
PV= 368,894.82/ 1.0075^360
PV= $25,042.80
<u>Stewart:</u>
FV= {A*[(1+i)^n-1]}/i
A= monthly payment
FV= {200*[(1.0075^360)-1]}/0.0075
FV= 366,148.70
PV= 366,148.70/1.0075^360
PV= $24,856.37
Martha has a higher present value because the interest gest compounded for one more time.
Answer:
8.54%
Explanation:
Current Index value:
= [current total market value of index stocks] ÷ [Base year total market value of index stocks] × Base year index value
= [(69 × 35000) + (122 × 32500)] ÷ [(63 × 35000) + (113 × 32500)] × 100
= 108.54
Return in percent:
= ( 108.54 - 100 ) ÷ 100
= 8.54%
Therefore, the value-weighted return for the index is 8.54%.
The answer is D.} the inflation rate was 12 percent.
