What is the investments equivalent annual annuity

Assignment Help Financial Management
Reference no: EM13913719

Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year 1, $270,000 in years 2 through 4, and $200,000 in year 5. The discount rate that your firm uses for projects of this type is 11.25%. What is the investment's equivalent annual annuity?

$52,377

$42,923

$41,387

$40,399

Reference no: EM13913719

Questions Cloud

Sean matthews is a waiter at the duluxe lounge : Sean Matthews is a waiter at the Duluxe Lounge. In his first weekly pay in March, he earned $150.00 for the 40 hours he worked. In addition, he reports his tips for February to his employer ($500.00), and the employer withholds the appropriate taxes ..
What is the amount of the cash flow to creditors : Pete’s Boats has beginning long-term debt of $180 and ending long-term debt of $210. The beginning and ending total debt balances are $340 and $360, respectively. The interest paid is $20. What is the amount of the cash flow to creditors?
Continuous process for manufacture : a proposal is set out below for a continuous process for manufacture of a fine chemical immediate.
About the odd dividend policy : Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it will increase the dividend by $5 per share for each of the next five years, and then never pay another dividend. If you require ..
What is the investments equivalent annual annuity : Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year 1, $270,000 in years 2 through 4, and $200,000 in year 5. The discount rate that your firm uses for projects of this type..
Accounting for inventory orders purchases sales returns : Accounting for Inventory Orders, Purchases, Sales, Returns, and Discounts
About the mature manufacturing firm : Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $7.65, but management expects to reduce the pay out by 5 percent per year indefinitely. If you require a return of 12 percent on this stock, what will you pay for a sha..
What is the appeal for pepsi print advertisement : what is the tag line for Pepsi print advertisement and what is message strategy (cognitive, affective, conative and their sub-categories) for Pepsi print advertisement?
Bonds make semi annual payments-common stock : Given the following information for Bellevue Power Co, find the WACC. Assume the company's tax rate is 35 percent. Debt: 5,000. 7% coupon bonds outstanding, $ 1000 par value, 20 years to maturity, selling for 92 percent of par; bonds make semi annual..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Level off to growth rate

Thirsty Cactus Corp. just paid a dividend of $2.30 per share. The dividends are expected to grow at 15 percent for the next eight years and then level off to a growth rate of 6 percent indefinitely. If the required return is 14 percent, what is the p..

  Required revenue to achieve the target operating income

Acme Medical Supply Company desires a target operating income amount of $100,000, with assumption inputs as follows: Compute the required revenue to achieve the target operating income and compute a contribution income statement to prove the totals.

  Suppose the average return on asset

Suppose the average return on Asset A is 6.9 percent and the standard deviation is 8.1 percent and the average return and standard deviation on Asset B are 4.0 percent and 3.5 percent, respectively. In a particular year, the return on Asset A was −4...

  What are the basic objectives of depository institution

What are the basic objectives of depository institution regulation? How do regulators attempt to achieve these objectives?

  Determine the range of annual cash inflows

Sensitivity analysis James Secretarial Services is considering the purchase of one of two new personal computers, P and Q. Both are expected to provide benefits over a 10-year period, and each has a required investment of $3,000.

  Why will total return rise when rates fall

Suppose that you own a callable U. S. agency bond like that in Exhibit 16.9. Explain why your total return will fall when interest rates rise. Identify changes in return associated with each component of total return. Why will total return rise when ..

  When net present value is negative-internal rate of return

When the net present value is negative, the internal rate of return is __________ the cost of capital.

  Under the expectations theory

Under the expectations theory, what does the slope of the yield of the yield curve reveal about the future path of interest rates?

  Both expect to earn the same rate of return

Jesse, age 20, plans to save $3,000 a year for 10 years starting at age 24. Alicia, age 20, plans to save $3,000 a year for 10 years starting at age 31. Both expect to earn the same rate of return. Which plan is better given that neither of these ind..

  Bond makes coupon payments semiannually

A bond makes coupon payments semiannually. Suppose its coupon rate is 6%, the interest rate is 8%, and it matures in 4 years. What is the present value of the bond? How much will it be worth one year from now? How much will it be worth in 4 years?

  Explain crocket''s estimate has considered some things

The new machine, according to the brochure sent over by the saleswoman, has a manufacturer's suggested retail price of $275,000, including installation and transportation

  What is the effective annual rate on such a student loan

The going rate on student loans is quoted as 8 percent APR. The terms of the loans call for monthly payments. (Interests are compounding every month.) What is the effective annual rate (EAR) on such a student loan?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd