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A risky $400,000 investment is expected to generate the following cash flows: Year 1 2 3 4 $145,300 $175,445 $156,788 $145,000 A. If the firm's cost of capital is 10 percent, should the investment be made? B. An alternative use for the $400,000 is a four-year U.S. Treasury bond that pays $28,000 annually and repays the $400,000 at maturity. Management believes that the cash inflows from the risky investment are equivalent to only 75 percent of the certain investment, which pays 7 percent. Does this information alter the decision in a?A firm's cost of capital is 12 percent. The firm has three investments to choose among; the cash flows of each are as follows:Cash InflowsA B CYear 1 $395 -- $1,2412 395 -- --3 395 -- --4 -- $1,749 --Each investment requires a $1,000 cash outlay, and investments B and C are mutually exclusive.a. Which investment(s) should the firm make according to the net present values? Why?b. Which investment(s) should the firm make according to the internal rates of return? Why?c. If all funds are reinvested at 15 percent, which investment(s) should the firm make? Would your answer be different if the reinvestment rate were 12 percent?Finance
Dayco operates industry average ratios are these: return on assets: 11%; asset turnover: 2.5 times; Net profit margin: 3.6 %. Compare Dayco's performance against the industry averages.
The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,120. What is the bond's nominal yield to call?
If the standard deviation of that eating is 0.2 pounds of food, then what is the total amount of food that a cafeteria should have on hand to be 95percent confident that it will not run out of food when feeding 50 college students.
You have another $8,000 to invest, and would like to invest it in a manner such that the risk of the new portfolio matches that of the overall market. What does the beta of the new security have to be?
Identify and describe the different financial markets, their functions, primary instruments, and the investor types. But, my initial answer to this question would have not been initially focused on the primary and secondary markets.
What is the future value of an investment which compounds annually at 8% and starts at $1,000/year and grows by 10% per year for 20 years (starting with the second year)?
Identify and explain the weakness in Lehman's governance practices.
In determining the cost of bank financing, which is the important factor?
What was GDP in 2008 for Illinois? How does Illinois rate when compared to other states?
the company uses the tax - free death benefit to pay off the policy loan and to mack the payment to the family if one was promised and then pockets the difference.
The Hamlin Corporation has an inventory conversion period of 60 days, a receivables collection period of 30 days, and a payables deferral period of 30 days. Its annual credit sales are $5,000,000, and its annual cost of goods sold (COGS) is 60% of..
Objective type questions on value of the Bond and Which of the following statement is CORRECT
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