Calculating present values A 5-year annuity of 10 $7,800 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 9 percent compounded semiannually, what is the value of…
Calculating price, income & cross price elasticity of demand A company has the following demand function for its product. Q=40,000-200P+500I+100PxWhere P is the price of the firm’s product, I is household disposable income in thousands of $, and Px is…
Mr. Smith used the following information to calculate the profit coefficients for Aqua-Spas and Hydro-Luxes: pumps cost $225 each, labor costs $12 per hour, tubing costs $2 per foot. In addition to pumps, labor, and tubing, the production of Aqua-Spas…
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.078 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have…
Calculating Net Worth Net worth = Assets – Liabilities Assets Liabilities Value of house $190,000.00 Emloyment tax payable $870.00 Life Insurance $300,000.00 Car $16,500.00 Taxable interest earned $900.00 CC Balance $3,800.00 Capital gains $126.00 Checking $5,000.00 IRA $24,000.00 CD $18,000.00…
A 9-year project has an initial fixed asset investment of $256,200, an initial NWC investment of $24,400, and an annual OCF of -$39,040. The fixed asset is fully depreciated over the life of the project and has no salvage value.…
Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 8%, and its par value is $100. A. What is the stock’s value?B. Suppose interest rates rise and pull the preferred stock’s yield up to…
With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a ´surf lifestyle for the home´. With limited capital, they decided to focus on surf print table and…
The managers of Merton Medical Clinic are analyzing a proposed project. The project’s most likely Net Present Value (NPV) is $120,000, but, as evidenced by the following NPV distribution, there is considerable risk involved:Probability NPV0.05 $-700,0000.2 $-250,0000.5 $120,0000.2 $200,0000.05 $300,000…
Assume that at the beginning of the year, you purchase an investment for $8,000 that pays $100 annual income. Also assume the investment’s value has decreased to $7,400 by the end of the year. a.What is the rate of return…
