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FV of uneven cash flow
You want to buy a house within 3 years, and you are currently saving for the down payment. You plan to save $7,000 at the end of the first year, and you anticipate that your annual savings will increase by 5% annually thereafter. Your expected annual return is 10%.
How much would you have for a down payment at the end of Year 3? Round your answer to two decimal places. $ ________
"If interest rates rise, the bond become more attractive to investors, so bond prices rise. Therefore, when the interest rates rise, bond prices will also rise" Your investment advisor has just given you the following advice: "Long-term bonds are a g..
Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,000, $9,000, and $15,000 over the next three years, respectively. After that time, Marko feels ABC will be worthless. Marko has determined th..
Mr. Williams is purchasing an entire bottling plant for $42,500,000. He has a tax rate of 35 percent. He has a contract to bottle for SNAP-ON ICE TEA. The break- even numbers of the factory are good and Bonika Financial has calculated the IRR of the ..
ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of $20 a share. XYZ has 2,500 shares outstanding at a price of $28 a share. XYZ is acquiring ABC for $36,000 in cash. The incremental value of the acquisition is $3,..
On July 1 of the current year, Melissa Co. acquired 25% of the outstanding shares of common stock of International Co. at a total cost of $700,000. The underlying equity (net assets) of the stock acquired by Melissa was only $600,000. Compute the tot..
A woman purchases a 10-year par bond with 8% semi-annual coupons. The bond is priced to yield 7.5% converted semi-annually. The coupons are reinvested in a fund paying 7.0% nominal, converted semi-annually. What is her nominal annual yield on this in..
A major lottery advertises that it pays the winner $10 million. However this prize money is paid at the rate of $500,000 each year (with the first payment being immediate) for a total of 20 payments. What is the present value of this prize at 10% int..
Farrah owns 5,000 shares of stock in DAS, Inc. with a market value of $15,000.DAS declares a 20% stock dividend. After the dividend is paid, Farrah owns. In industries with volatile earnings, the residual dividend policy results in the most consisten..
The Wheel Deal Inc., a company that produces scooters and other wheeled non-motorized recreational equipment is considering an expansion of their product line to Europe. What are the annual after-tax cash flows for the Wheel Deal project?
Imagine you have been tasked with evaluating a portfolio manager. How would you evaluate their performance? Share specific categories you would assess, what you would expect to see and any areas in which you allow leeway
Dicen and two others formed a company, Sesco, to do environmental consulting for businesses with smokestacks. Two years later, the company was bought by New Sesco, Inc. Dicen signed an agreement that he would not do business in competition with New S..
Your company is considering the replacement of an old delivery van with a new one that is more efficient. The old van cost $40,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight line method over a us..
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