What is the future worth of each project

Assignment Help Financial Management
Reference no: EM131047534

Tempura Inc. is considering two projects, and must do one of them. Project A requires an investment of $44,000. Estimated annual receipts for 20 years are $24,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $95,000, has annual receipts for 20 years of $25,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 10.5%/year.

 

What is the future worth of each project?

Reference no: EM131047534

Questions Cloud

Effective annual return on its consumer loans : Tai Credit Corp. wants to earn an effective annual return on its consumer loans of 14.9 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers?
Growth rate in earnings per share : 3 years ago, Weed Go Inc. earned $1.33 per share. Its earnings this year were $2.31. What was the growth rate in earnings per share (EPS) over the 3-year period? State your answer as a percentage to two decimal places (e.g. 16.38%). The % sign is not..
Expected rate of return on a stock with beta : Investors expect the market rate of return this year to be 20.00%. The expected rate of return on a stock with a beta of 1.4 is currently 28.00%. If the market return this year turns out to be 18.00%, how would you revise your expectation of the rate..
Purchase an investment that will generate annual cash flows : You have the opportunity to purchase an investment that will generate annual cash flows of $11,982 per year for the next 28 years. If your required rate of return on this investment is 23.45%, how much is the investment worth?
What is the future worth of each project : Tempura Inc. is considering two projects, and must do one of them. Project A requires an investment of $44,000. Estimated annual receipts for 20 years are $24,000; estimated annual costs are $12,500. What is the future worth of each project?
Analyst is evaluating securities in a developing nation : An analyst is evaluating securities in a developing nation where the inflation rate is very high. As a result, the analyst has been warned not to ignore the cross-product between the real rate and inflation. If the real risk-free rate is 6.3% and inf..
The liquidity premium on the corporate bond : A Treasury bond that matures in 8 years has a yield of 3.24%. A 8-year corporate bond has a yield of 7.8%. Assume that the liquidity premium on the corporate bond is 0.36%. What is the default risk premium on the corporate bond?
Credit card issuers must by law print annual percentage rate : Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 19.83%, with interest paid monthly, what is the card's EFF%? State your answer as a percentage to 2 d..
Best estimate of the stocks current market value : Acme Corporation just paid a dividend of D 1 = $1.72. Analysts expect the company's dividend to grow by 10% between year 1 and 2, and at a constant rate of 5% from year 2 to 3 and continue with the 5% thereafter. The required return on this low-risk ..

Reviews

Write a Review

Financial Management Questions & Answers

  Inventory transfers to the west coast move by truck

Elmer’s Glues are produced in upstate New York and sold throughout the country. Shipment is either direct from the factory or via regional warehouses, including one in the Los Angeles area. Inventory transfers to the West Coast move by truck.  The pe..

  Used regularly as valuation metric

P/E ratio is used regularly as a valuation metric and you will often hear it discussed in the business news media (i.e. CNBC, Bloomberg, Fox Business, etc). You have just had the opportunity to apply P/E in a relatively easy assignment. Based on this..

  What is the receivables turnover

Evil Pop, Inc., has an average collection period of 27 days. Its average daily investment in receivables is $43,300. Assume 365 days per year. What is the receivables turnover?

  Tamping plant projects required rate of return

ABC Manufacturing Company will invest in a stamping plant in Madison Ohio. The plant requires an initial outlay of $20,000,000. Net cash inflows from the project are expected to be $10,000,000 for the first year, $8,000,000 for year 2, and $5,000,000..

  Municipal bond with a coupon rate-price of the bond

A municipal bond with a coupon rate of 2.5 percent has a yield to maturity of 3.5 percent. Assume a face value of $5,000. If the bond has 20 years to maturity, what is the price of the bond?

  What is the yield on one year t-bonds

Quantitative Problem: Today, interest rates on 1-year T-bonds yield 1.7%, interest rates on 2-year T-bonds yield 2.15%, and interest rates on 3-year T-bonds yield 3.5%. If the pure expectations theory is correct, what is the yield on 1-year T-bonds o..

  When financial institutions attempted to liquidate assets

When financial institutions attempted to liquidate assets to repay maturing money market instruments over the period form 2007-2008 the result was downward pressure on asset prices causing the run on money market instruments to worsen.

  Use duration to estimate the new price of the bond

Consider a 6 percent coupon bond with twelve years to maturity and a current price of $1,062.40. Suppose the yield on the bond suddenly increases by 2 percent. Use duration to estimate the new price of the bond. Calculate the new bond price.

  Operation of the global monetary and financial system

1. Attain a critical understanding of the nature of the operation of the global monetary and financial system.

  Explain what economic factors are driving the market

What has happened over each week that was consistent with what you have learned about security investments in this course? Did the stock price react quickly to news? Prepare a 10-15 slide presentation excluding the title slide and reference slides..

  Construct the hospitals base case projected

Construct the hospital's base case projected P&L statement and what is the hospital's breakeven point?

  What is the value of the treynor measure of this portfolio

A stock has a total return of 16.4%, a standard deviation of 14.5% and a beta of 1.63. The market rate of return is 12.4%, while the market's Treynor measure is 6.3. What is the value of the Treynor measure of this portfolio?

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