Find the amount of the companys payments

Assignment Help Financial Management
Reference no: EM131506476

A company is considering buying a CNC machine. In today's dollars, it is estimated that the maintenance costs for the machine (paid at the end of each year) will be $25,000, $26,000, $28,000, $30,000, and $32,000 for years 1 to 5, respectively. The general inflation rate (f) is estimated to be 5% per year, and the company will receive 13% return (interest) per year on its invested funds during the inflationary period. The company wants to pay for maintenance expenses in equivalent equal payments (in actual dollars) at the end of each of the five years. Find the amount of the company's payments.

Reference no: EM131506476

Questions Cloud

What is the effective annual rate of return on a bond : What is the effective annual rate of return on a bond that has a holding period return of 10%, assuming it pays coupons semi-annually?
Semiannual coupons is trading with a yield to maturity : Suppose a seven-year, $1,000 bond with a 7.8% coupon rate and semiannual coupons is trading with a yield to maturity of 6.61%.
Estimate project cash flows and compute net present value : Assume a 10 percent weighted average cost of capital. Estimate the project cash flows, and compute Net Present Value.
What would be the present value if it were an annuity due : Your task this week is to teach Grammy and the board the time value of money and its related concepts. What would be the present value if it were annuity due?
Find the amount of the companys payments : A company is considering buying a CNC machine. Find the amount of the company's payments.
What is the required return on company stock : If the company has a dividend yield of 4.2 percent, what is the required return on the company’s stock?
Psy Ops need from external sources to fund expected growth : what amount of additional funds will Psy Ops need from external sources to fund the expected growth?
Currency risk management techniques include forward hedges : Currency risk management techniques include forward hedges, money market hedges, etc.
What will be optimal cash return point : What will be its optimal cash return point?

Reviews

Write a Review

Financial Management Questions & Answers

  About project cash flow estimation

Which of the following statements about project cash flow estimation is false?

  What is the pistol division wacc and rifle division wacc

Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta (pistol) equals=0.8 and beta (rifle) equals=1.0. The pistol division's financial proportions are 50.0 % debt and 50.0 % equit..

  What is the total rate of return on the bond

Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has 3 years until maturity. Find the bond's price today and 6 months from now after the next ..

  What is yield to maturity of this bond

The bond has a coupon rate of 6 percent paid annually and matures in 16 years. What is the yield to maturity of this bond?

  Cemetery project will provide a net cash inflow

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $88,000 for the firm during the first year, and th..

  What should be the price of this preferred stock

A share of Company Z preferred stock pays a quarterly dividend of $3.80. If investors require a 12 percent rate of return, what should be the price of this preferred stock?

  Consider a stock index currently standing

Consider a stock index currently standing at 2,100. The dividend yield on the index is 3% per annum and the risk-free rate is 1%. A 3-month European call option on the index with a strike price of 2,000 is trading at $105.91. What is the value of a 3..

  Construct depreciation table using the straight line method

A machine has a value of $65,000 and is estimated to operate up to 6 years, ending with a scrap value of $7,000. Construct a depreciation table using the straight-line method.

  The anticipated aftermarket price

IPO your firm wishes to raise $10 million of net proceeds by going public. The anticipated aftermarket price (after the IPO) is $23 and the firm plans to issue the new shares at a price that is $3.00 below the anticipated aftermarket price.

  Net working capital that will be recovered at end of project

A company is considering an investment in a new project which would require $55,000 worth of (unrecoverable) capital expenditures and an increase of $45,000 in net working capital that will be recovered at the end of the project. Each year, starting ..

  Loan contract with re-payment schedule

Calculate your monthly payments for the next 7 years. What is the maximum prepayment fee that you would pay to accept the deal?

  Tool works fully diluted income per share

What was Illinois Tool Works’ (ITW) fully diluted income per share on its Dec 2015 income statement?

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