You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars):
Years from Now After-Tax Cash Flow
0 -40
1-10 15
The project's beta is 1.8.
Assuming that rf = 8% and E(rM) = 16%, what is the net present value of the project?

Answers

Answer 1

Answer:

$18.092 million

Explanation:

For determining the net present value first we have to find out the cost of equity or discount rate by using the CAPM formula

Cost of equity = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 8% + 1.80 × (16% - 8%)

= 8% + 1.80 × 8%

= 8% + 14.4%

= 22.4%

Now the net present value is shown below:

= -$40 million + $15 million × PVAF(22.4%, 10 years)

= -$40 million + $15 million × 3.8728

= $18.092 million


Related Questions

Generally, State A may exercise "long arm" jurisdiction over a defendant located in State B if the defendant:________. a. once resided in State A. b. uses a product produced in State A. c. made a contract in State A. d. has relatives in State A.

Answers

Answer:

c. made a contract in State

Explanation:

Jurisdiction is the ability of a court to sue a person and ask him to come to court. Of a court does not have a jurisdiction on a person they will not be able to issue a judgement on that person.

Long arm jurisdiction is one that enables a court prosecute a person that does not reside in the state.

However the person must have sufficient minimum contact in the state to enable the state prosecute him.

For example if a person makes a contract in a state and violates that contract, the state can prosecute him even if he lives in another state.

United services automotive association is one of the largest diversified financial. What are the highest paying jobs at United Services Automobile Association?

Answers

Answer with Explanation:

According to theladder, the average pay in the United Services Automotive Association is $132,957 and the highest paying jobs are mostly taken by the CFA candidates. The highest paying job includes:

Risk Analyst is the one who analyzes the risk that the investment of the company is bearing and the relevant actions are proposed by the person. Director of Risk Management is assigned the task to manage a team of risk management team by continuous assessment of the performance of the team members, setting deadlines for achievement of tasks, formation of policies and procedures, etc.Product Owner who is responsible for managing the product backlog and setting a standard levels and designing policies for developing products.

The junior level jobs usually pay somewhat between $80k to $100k which means that all the jobs in USAA are very highly paid jobs in the country.

So if you are offered a position take it and save enough to start your own business in the future.

Copper, Inc., initially issued 100,000 shares of $1 par value stock for $500,000 in 2013. In 2015, the company repurchased 10,000 shares for $100,000. In 2016, 5,000 of the repurchased shares were resold for $80,000. In its balance sheet dated December 31, 2016, Copper, Inc.’s Treasury Stock account shows a balance of:a. $ 0b. $ 20,000c. $ 50,000d. $100,000

Answers

Answer:

c. $50,000

Explanation:

Dr Cash 500,000

    Cr Common stock 100,000

    Cr Additional paid in capital 400,000

Dr Treasury stock 100,000

    Cr Cash 100,000

Dr Cash 80,000

    Cr Treasury stock 50,000

    Cr Additional paid in capital 30,000

Treasury stock's balance = $100,000 - $50,000 = $50,000 debit

Which of the following is true regarding externalities? Group of answer choices Externalities can only be corrected with government regulation. Externalities always involve external costs. Externalities occur when the actions of an individual or group spill over onto others, without their consent. Externalities generally enhance the rate of economic growth.

Answers

Answer: Externalities occur when the actions of an individual or group spill over onto others, without their consent.

Explanation:

By definition, an Externality is the effect of an action by an individual or group that spills over onto third parties without their consent.

Externalities can be either negative or positive. A positive externality for instance would be bees from a bee farm pollinating flowers in the environment.

A negative externality would be air pollution from China for instance contributing to global warming effects experienced in Northern Africa.  

Hernandez Corporation expects to have the following data during the coming year. What is Hernandez's expected ROE

Answers

Answer:

13.56%

Explanation:

For the computation of return in equity first we need to follow some steps which are shown below:-

D/A = Debt ÷ Total assets

Debt = $200,000 × 65%

= $130,000

Interest expense = $130,000 × 8%

= $10,400

Total assets = Total liabilities + Total equity

Total equity = $200,000 - $130,000

= $70,000

Net income = (EBIT - Interest expense) × (1 - Tax rate)

= ($25,000 - $10,400) × (1 - 0.35)

= $9,490

ROE = Net income ÷ Equity

= $9,490 ÷ $70,000

= 13.56%

The present value of the following cash flow stream is $6200 when discounted 9% annually. What is the value of the missing cash flow?
a) Year 1- $1300
b) Year 2- ?
c) Year 3- $1950
d) Year 4- $2640

Answers

Answer:

Cash flow year 3= $1,938.2

Explanation:

Giving the following information:

PV= $6,200 when discounted 9% annually.

Cf:

a) Year 1- $1300

b) Year 2- ?

c) Year 3- $1950

d) Year 4- $2640

To calculate the missing cash flow, we need to use the following formula:

NPV= ∑[Cf/(1+i)^n]

6,200= 1,300/1.09 + x + 1,950/1.09^3 + 2,640/1.09^4

6,200= 1,192.66 + x + 1,505.76 + 1,870.24

Year 3 (PV)= 1,631.34

Cash flow year 3= 1,631.34*1.09^2

Cash flow year 3= 1,938.2

Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?
a. The present value of a 5 year, $250 annuity due will be lower than the PV of a similar ordinary annuity. b. A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
c. A bank loan?s nominal interest rate will always be equal to or greater than its effective annual rate.
d. If an investment pays 10% interest, compounded quarterly, its effective annual rate will be greater than 10%.
e. Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly and B pays semiannually. Deposits in Bank B will provide a higher future value if you leave your funds on deposit.

Answers

Answer: d. If an investment pays 10% interest, compounded quarterly, its effective annual rate will be greater than 10%.

Explanation:

Effective annual interest rate = (1 + (nominal rate / number of compounding periods)) ^ (number of compounding periods) - 1)

= (( 1 + ( 10% / 4)) ^ 4) - 1

= 10.38%

10.38% > 10%

After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:

Answers

Answer: increase

Explanation:

A tariff is a tax that is levied on goods that are imported into a particular country. It should be noted that tariffs are levied on order to prevent dumping, protect the host indutries and also prevent consumption of harmful products.

If the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will increase. This is because the tariff will be added as production cost to the producer which will lead to increase in price.

A portfolio with a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%. This portfolio had a Sharpe ratio of ____.

Answers

Answer: 0.3

Explanation:

The Sharpe ratio is simply used by organizations and investors in order to compare the return on an investment to its risk.

From the question, we are informed that a portfolio has a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%.

The Sharpe ratio will be:

= (15% - 6.0%)/30%

= 9%/30%

= 0.09/0.3

= 0.3

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (10,000 units) Production costs (13,000 units): $1,000,000 Direct materials Direct labor Variable factory overhead Fixed factory overhead $481,000 231,400 115,700 76,700 904,800 Selling and administrative expenses: Variable selling and administrative expenses $140,200 Fixed selling and administrative expenses 54,300 194,500 If required, round interim per-unit calculations to the nearest cent. Required:Prepare an income statement according to the absorption costing concept.

Answers

Answer:

Shawnee Motors Inc.

Income Statement

For the month ended August 31, 202x

Sales revenue                                                    $1,000,000

- COGS                                                               ($696,000)

Gross profit                                                           $304,000

S&A expenses:

Variable S&A expenses   $140,200 Fixed S&A expenses         $54,300           ($194,500)

Operating profit                                                    $109,500

Explanation:

Sales (10,000 units) $1,000,000

Production costs (13,000 units):

Direct materials $481,000Direct labor $231,400Variable factory overhead $115,700Fixed factory overhead $76,700 Total production costs $904,800

Selling and administrative expenses:

Variable selling and administrative expenses $140,200 Fixed selling and administrative expenses $54,300 Total S&A expenses $194,500

COGS = (10,000 / 13,000) x $904,800 = $696,000

For week 3, the MPS quantity is 120, the Forecast is 80, and Customer Orders are 55. Projected On-hand Inventory will be equal to

Answers

Answer:

Projected on hand Inventory =  40

Explanation:

Here, we will see which is larger out of Forecast Number and Customer Order Number, here, we will take larger value, as Forecast is 80, and Customer Orders are 55, hence, Forecast has to be taken,

Projected on hand Inventory = MPS Quantity - Forecast number

Projected on hand Inventory = 120 - 80

Projected on hand Inventory =  40

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price ceiling of $15 is imposed what will be the resulting full economic price?

Answers

Answer: $25

Explanation:

The full economic price is the the dollar amount that a business gets as a result of a price ceiling and will be the price that equates the Quantity demanded to that supplied given the price ceiling.

Quantity demanded = 100 - 2P

= 100 - 2 * 15

= $70

Quantity Supplied = 5 + 3 * P

= 5 + 3 * 15

= $50

Qs = Qd

50 = 100 - 2P

2P = 50

P = $25

Amounts received in advance from customers for future products or services:_______a) Are revenues. Increase income. b) Are liabilities. c) Are not allowed under GAAP. d) Require an outlay of cash in the future.

Answers

Answer:

The answer is B. Liabilities

Explanation:

This is known as deferred revenue and Deferred Revenue is being treated as liability.

Even though, the money for the service or product has been received, the service to be rendered or the goods to be delivered is still in the future. And because it will be enjoyed by the customer in the near future, it is being treated as a liability.

Decker's is a chain of furniture retail stores. Furniture Fashions is a furniture maker and a supplier to Decker's. Decker's has a beta of 1.34 as compared to Furniture Fashion's beta of 1.14. The risk-free rate of return is 3.6 percent and the market risk premium is 8 percent. Both firms are all equity financed. What discount rate should Decker's use if it considers a project that involves the manufacturing of furniture?

Answers

Answer:

14.32%

Explanation:

According to the CAPM :

rate of return = risk free rate + (beta x market risk premium)

3.6% +  1.34 x 8% = 14.32%

What would be included in the entry to record actual Manufacturing Overhead costs incurred in a process​ department?

Answers

Answer:

debit to manufacturing overhead.

Explanation:

When a product is manufactured, some costs are associated with the production processes. These costs are indirect costs which includes but not limited to; depreciation, rent of buildings, salaries(maintenance and managers) , wages, utilities for the factory etc. Manufacturing overhead consist of all production costs except direct material and labor.

With regards to the above, when actual manufacturing overhead costs(machine maintenance, supervisor salary, factory utilities) are incurred in a given period, they are recorded as debit in the manufacturing over head account while the credit entry goes to account payable.

If increasing the admission charge for National Parks increases the National Park Service's total revenue, then the demand for National Park visits is: Multiple Choice inelastic. elastic. perfectly elastic. a perfectly horizontal line.

Answers

Answer: inelastic

Explanation:

If increasing the admission charge for National Parks increases the National Park Service's total revenue, then the demand for National Park visits is inelastic.

This shows that a change in price will lead to a minimal change in the quantity demanded by the consumers. Even though price was increased, the number of visitors to the park rarely changed. This will lead to increase in revenue.

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:_______.
Restin, Los Angeles Bay Area Central Valley
Inc. Division Division Division
Revenues $ 1,000,000 $ 280,000 $ 315,000 $ 405,000
Variable operating expenses 554,000 154,000 170,000 230,000
Controllable fixed expenses 240,000 75,000 85,000 80,000
Noncontrollable fixed expenses 90,000 25,000 30,000 35,000
In addition, the company incurred common fixed costs of $21,000.
The profit margin controllable by the Central Valley segment manager is:_______.

Answers

Answer:

The profit margin controllable by the Central Valley segment manager is:  $ 95,000.

Explanation:

Only items directly controllable by the Manager should be included in the divisional financial performance measure.

Central Valley Division

Revenues                                         $ 405,000

Less Variable Costs :

Variable operating expenses        ($ 230,000)

Controllable Contribution                $ 175,000

Less Controllable fixed expenses   ($80,000)

Controllable Profit                             $ 95,000

1
2
A business plan is a document describing the start-up costs and operating expenses of a new business.
Please select the best answer from the choices provided
OT
OF
False jus took the test .

Answers

The answer is false just took the test

Which of the following securities can be sold by an individual holding an investment companies/variable annuities (Series 6) registered representative's license?
I. Municipal Investment Trusts
II. Real Estate Investment Trusts
III. Municipal Bond Funds
IV. Revenue Bonds

Answers

Answer:

I and III only

I. Municipal Investment Trusts

III. Municipal Bond Funds

Explanation:

In Series 6, securities license entitles holders to register as a company's representative and enables the holder to sell certain types of mutual funds, variable annuities and even insurance. In Series 6, individual sell or buy some mutual funds, variable life insurance, municipal fund securities, etc. They are not authorized to sell corporate securities, etc.

Evaluating the competitive value of the cross-business strategic fits in a diversified firm's business portfolio entails consideration of:___________.
a. whether the competitive strategies in each business possess good strategic fit with the parent company's corporate strategy.
b. whether the parent's company's strongest competitive synergies are being deployed to maximum advantage in each of its business units.
c. how much competitive value can be generated from forceful efforts to capture the benefits of strategic fits stemming from cross-business transfer of competitively valuable resources and capabilities, cost-saving efficiencies in the value chains of sister businesses, brand- name sharing, and cross-business collaboration to create new performance-enhancing competitive capabilities.
d. whether the competitive strategy employed in each business acts to reinforce the competitive power of the strategies employed in the company's other businesses.
e. how compatible the competitive strategies of the various sister businesses are and whether these strategies are optimally crafted to achieve the same kind of competitive advantage and thereby enhance the diversified company's overall performance.

Answers

Answer:

c. how much competitive value can be generated from forceful efforts to capture the benefits of strategic fits stemming from cross-business transfer of competitively valuable resources and capabilities, cost-saving efficiencies in the value chains of sister businesses, brand- name sharing, and cross-business collaboration to create new performance-enhancing competitive capabilities.

Explanation:

To carry out the evaluation of the competitive value of the cross-business strategic fits in a diversified firm's business portfolio, the firm should assess and analyze the competitive value to be derived from the undertakings in a bid to takeover the advantages of strategic fits of cross business transfer.

Hence, in this case, the correct answer is option C, as it fully details what needs to be considered.

As families have become smaller over the past one hundred years, people are spending _____ money on goods than they were in the early 1900s.

Answers

The answer:

more

Why:
Prices have sky rocketed in the past 100 years in general, and manufacturers are pricing items higher because they know the people will buy the item anyway. It’s all a marketing tactic.

Answer:

less

Explanation:

i just got it correct in odyssey ware

Panjim began 2015 with salaries payable balance of $75,000. It had 2015 salary expense of $80,000. Its 2015 ending salaries payable balance must be______.
a. $95,000.
b. 
$55,000.
c. 
$155,000.

Answers

Answer:

c. $155,000

Explanation:

The computation of the ending balance of salaries payable is shown below:

= Beginning balance of salaries payable + salary expense - payment made during the year

= $75,000 + $80,000 + $0

= $155,000

By applying the above formula, we can determined the ending balance of salaries payable and the same is to be considered

hence, the correct option is c.

When the cost method is used to account for a stock investment the carrying value of the investment is affected by

Answers

Answer: b. neither the earnings nor the dividends of the investee.

Explanation:

When the cost method is used to account for a stock investment, it means that in the books, the stock is to be recorded at the price it was purchased for.

This means that even if earnings and dividends accrue on the stock, it is not to change in value but should stay being recorded at the price it cost to acquire.

Bond appraisals are used in the municipal secondary market because:_______. I the market is thin II the market is active III trades are reported to a consolidated tape IV trades are not reported to a consolidated tape
A. I and III B. I and IV C. II and III D. II and IV

Answers

Answer: B. I and IV

Explanation:

An appraiser bond is simply an insurance form that is bought by appraisers which indicates total compliance with the regulations and the laws in their field.

Bond appraisals are used in the municipal secondary market because the market is thin and trades are not reported to a consolidated tape.

"A customer owns an ABC Call option. ABC declares a dividend for shareholders on record July 10th. The last day to exercise the option and get the dividend is:"

Answers

Answer: July 7th

Explanation:

Call options are simply financial contracts whereby the option buyer is not obliged but has the right, to purchase bond, stock, asset or a commodity at a particular price and time.

It should be noted that before ABC declares a dividend for shareholders on record July 10th, the last day to exercise the option and get the dividend will be 3 days earlier which will be July 7th.

What is the yield to maturity (YTM) on a simple loan for $1,500 that requires a repayment of $15,000 in five years’ time?

Answers

Answer:

Yield to maturity = 58.5%

Explanation:

The yield to maturity on the loan can be worked out using  the Future value of a lump sum formula.  

The future value of a lump sum is the amount it would amount to if interest is earned and compounded at a certain interest rate.  

The formula is

FV = PV × (1+r)^(n)  

PV = Present Value- 1,500

FV - Future Value, - 15,000

n- number of period- 5=

r- yield to maturity ?  

15,000 = 1,500× (1+r)^(5)

(1+r)^(5) =15,000/1,500 =10

(1+r)^(5) =10

1+r = 10^(1/5)

r= 10^(1/5) -1 = 0.5848

r = 0.5848 × 100 = 58.5%

r=58.5%

Yield to maturity = 58.5%

Which statement is true of employee empowerment? A) Managers should ensure that employees are not linked to resources outside the organization, such as customers. B) Jobs must be designed to give employees the necessary latitude for making a variety of decisions. C) Employee empowerment shifts the recruiting focus away from cognitive and interpersonal skills toward general technical skills. D) Employee empowerment prevents holding employees accountable for the products and services they developed. E) Proper training must be provided only to supervisors so that they can exert their wider authority.

Answers

Answer:

B) Jobs must be designed to give employees the necessary latitude for making a variety of decisions.

Explanation:

The employee empowerment aims to provide resources and skills necessary for employees to have freedom and make their own decisions.

The organizational structure of a company will directly influence how employees are motivated or not to make certain decisions. In companies with a horizontal organizational structure, which is more flexible, there is an incentive for employees to make their decisions, which is a process that encourages innovation, engages employees, makes employment more motivating and valued, reduces response time of a decision and makes the decision-making process less bureaucratic and rigid.

Treasury bonds paying an 8% coupon rate with semiannual payments currently sell at par value. What coupon rate would they have to pay in order to sell at par if they paid their coupons annu- ally? (Hint: What is the effective annual yield on the bond?)

Answers

Answer: 8.16%

Explanation:

The Effective Annual Yield is the interest rate that converts an interest rate that compounds more than once a year to an annual rate.

Expressed by;

= (1 + interest/number of times compounded per year)^n - 1

= ( 1 + 0.08/2)^2 - 1

= 1.0816 - 1

= 8.16%

if a business with several branches did not maintain a system of branch account, what financial control element would be missing?​

Answers

Answer:

Branch Performance Evaluation will be missing in such a system as the performances of the several branches cannot be determined or compared.

Explanation:

Branch performance evaluation is the sum of all the control and productive procedures to measure the activities of branches and the results they produce based on their activities and responsibilities for the corporate resources at their disposal.  This branch-wide performance evaluation becomes the missing link, assuming that branches exercise some internal controls on their own.

What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense

Answers

Answer: ,$446,600

Explanation:

Here is the complete question:

Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $464,000. Of this sum, $58,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $58,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%.

What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense?

The depreciation expense is simply the decrease in an asset's cost due to its usage. For the straight-line depreciation, the cost of the asset is written off evenly over the entire economic life of the asset.

present value of the cost of the kiln if the installation cost is treated as a separate current expense is calculated as: the difference between the cost of the kiln and the tax shield on the expense of the installation costs. This will be:

= $464,000 - ($58,000 × 30%)

= $464,000 - ($58,000 × 0.3)

= $464,000 - $17,400

= $446,600

Other Questions
_____ is a human-centered, solution-focused creative process that applies both intuition and analytical thinking to clarify problems and generate innovative solutions. which phrase completes the diagram1. discrimination faced by immigrants 2. criticisms made about trustbusters 3. problems fixed by civil service reform4. practices associated with political machines PLSSS HELPP ASAPP and plssssss SHOW UR WORK PLSSS & TYY if JL=5x+2, find JL Combine Like Terms:10z + 2z - 2 How are subordinate clauses and prepositional phrases similar? Neither can stand by itselfBoth are independent Both can be used as adjectives and adverbsNeither depends on any other sentence elements Directions: Something that is valuable is scarce and give utility. Something that isn't value either doesn't give utility, or it is not scarce. Identify 2 objects in your house: one object must have value to you or your family (think about how upset you or your family would be if was lost, stolen, or broken). The other object must have little value (nobody would really notice or be upset if it was lost, stolen, or broken). Explain why these objects are valuable/not valuable in terms of utility and scarcity. Object 1: Object 2: Find the value of x if C is the midpoint of AB and AC = 5x and BC = 10 21.Name a structure that is in the medial part of the body, located inferior to the lungs and posterior to the intestines. Note: A coronal section would contain this structure and the heart, and it is more caudal than the pancreas. What is negative 500 minus 150 I think its -650 Im helping my son Develop an argument about whether the Minecraft is historically accurate or not A box contains $7.45 in nickels, dimes, and quarters. There are 43 coins in all, and the sum of the numbers of nickels and dimes is 3 less than the number of quarters. How many coins of each kind are there? Which of Oklahoma's worst natural disasters had the longest-lasting effects?a. the Dust Bowlb. the Tornado Outbreak of 1999C. the Woodward Tornadod. the Blizzard of 1971 Given the incomplete equation 4Al + 3O2 2X, what compound is X? Real Numbers:Question 6Which of the following numbers is closest toV90?Select one:12o 1030o 45 Please help asap thanks so much What is the difference between count noun and concrete noun? Read It! Central Africa has long been the home of many gorillas. But the gorillas could die out within 15 years. Their forest homes are being destroyed. More people are moving to the area. Trees are being cut down for wood. Gold, diamond, and mineral mining are also damaging the forests. Other dangers include hunting and disease. Recent wars have made the protection of gorillas more difficult. A United Nations report came out. It explained these problems and suggested some solutions. Do It! The gorillas are A roaming B adjusting trained threatened Submit x/w = z/y. solve for y what is medium level profession Been working for 30 minutes cant wrap my head around this, need help fast!