### What compounded annual rate of return will that represent

Assignment Help Financial Management
##### Reference no: EM13885059

Time value of money: The final tally is in: This year’s operating costs were down \$100,000,a decrease directly attributable to the \$520,000 investment in the automated materials handling system put in place at the beginning of the year.

a. If this level of annual savings continues for five more years, resulting in six total years of annual savings, what compounded annual rate of return will that represent?

b. If these annual savings continue for nine more years, for a total of 15 years of annual savings, what compounded annual rate of return will that represent?

#### Questions Cloud

 Shares tomorrow in a seasoned equity offering : Pete's Pasta went public five years ago with an issuance of 5 million shares which, as of yesterday, were trading at \$51.68 per share. They are looking to raise capital to start up a chain of brewpubs in the Detroit area by issuing an additional 1.3 .. Considering investing in project with characterisitics : You’re considering investing in a project with the following characteristics: Compute the NPV of the project if the tax rate is 0% per year. Is the IRR in this case higher or lower than 20%? Promises to generate cash flow : At a Discount Rate of 9.5%, a plot of land that promises to generate a cash flow of \$ 12,000 per year forever Is worth: Find the expected return E(rM) of the market portfolio : In the following, assume that the CAPM is true. Denote by rM the return of the market portfolio, βi the beta of security i with the market portfolio, and ρi,M the correlation between security i and the market portfolio M. Find the risk-free rate rf o.. What compounded annual rate of return will that represent : Time value of money: The final tally is in: This year’s operating costs were down \$100,000,a decrease directly attributable to the \$520,000 investment in the automated materials handling system put in place at the beginning of the year. If this level.. Discounting-according to economic theory : Discounting. According to economic theory, agricultural land values (prices) equal the present value of expected future rents, where rents are calculated as the difference between revenue received and production costs. Houses. Suppose you have an off.. Consider the spot interest rates for maturities of one : Consider the following spot interest rates for maturities of one, two, three, and four years. r1 = 3.8% r2 = 4.2% r3 = 4.9% r4 = 5.7% Assuming a constant real interest rate of 2 percent, what are the approximate expected inflation rates for the next .. A treasury bill has a bid yield : A Treasury bill has a bid yield of 3.46% and an ask yield of 3.4%. The bill matures in 120 days. Assume a face value of \$1,000. What is the least you could pay to acquire a bill? What will be the required return on your portfolio : You have been managing a \$5 million portfolio that has a beta of 1.00 and a required rate of return of 12%. The current risk-free rate is 5.00%. Assume that you receive another \$500,000. If you invest the money in a stock with a beta of 0.70, what wi..

### Write a Review

#### Evaluating replacing their large mainframe computer

The management of Kimco is evaluating replacing their large mainframe computer with a modern network system that requires much less office space. The network would cost \$500,000 (including installation costs) and due to efficiency gains, would genera..

#### One mutual fund that reflects your investment style

You will be developing a simple portfolio that will be used for analysis over the following five weeks. This will also be used in your in-depth analysis of the entire portfolio for the Week Six Final Paper. You are given \$10,000 to allocate to a port..

#### Estimate the daily volatility

Suppose that observations on a stock price (in \$) at the end of each of 15 consecutive days are as follows: Estimate the daily volatility

#### The real risk-free rate and inflation is expected

The real risk-free rate is 4%. Inflation is expected to be 2% this year and 4% the next two year. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury securities?

#### Compute the book value-liquidation value-replacement value

We know the following about Alloy and Brant (A&B). Total assets are \$220m, D is \$140m, E is \$60m, preferred stock of \$20m, cash is \$100m and the # of shares is 1m. We estimate that the market value of equity is 2 times the book value of it. Finally, ..

#### Develop a spreadsheet model for a listed australian company

The Assignment for Accounting Modelling ACCT3003. Develop a spreadsheet model for a listed Australian company using advanced MS Excel functions as part of its construction with a written explanation of your financial model and how the output from ..

#### Probabilities of expected return of a stock

Suppose someone tells you that the probabilities of expected return of a stock are as follows

#### The payback period is not concerned with

The payback period is not concerned with

#### Problem on financial management

Problem on financial management.

#### Debt obligations outstanding during the construction period

Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of \$5,016,100 on January 1, 2014. Harrisburg expected to complete the building by December 31, 2014. Harrisburg has ..

#### What are the internal and sustainable growth rates

Better Burgers reported the following numbers (in millions) for the years ending February 2011 and 2012. What are the internal and sustainable growth rates? (Do not round intermediate calculations. What are the internal and sustainable growth rates u..

#### Trade credit terms-annualized cost of forgoing the discount

If a firm buys trade credit terms of 4/10, net 60 and decides to forgo the trade credit discount and pay the next day, what is the annualized cost of forgoing the discount assuming a 360 day year?