Time-value-of-money

Assignment Help Financial Management
Reference no: EM131049658

Time-Value-of-Money Question: A company plans to purchase an item at a cost of $260,000 with a service life of 8 years. At the end of the 8th year, the item has a salvage value of $40,000. Considering an interest rate of 7% per year, what would the annual cost of the item be?

Reference no: EM131049658

Questions Cloud

Annual cost of this machine considering the interest rate : Suppose the annual cost is all the fixed costs. And the variable costs of producing mechanical parts your company designed are $19.0/unit, and the selling price is $20.0/unit. How many units per year your company will need to produce to break even ev..
Debt-equity ratio-what is the initial cost of the plant : Sheaves Corp. has a debt−equity ratio of .9. The company is considering a new plant that will cost $108 million to build. When the company issues new equity, it incurs a flotation cost of 7.8 percent. The flotation cost on new debt is 3.3 percent. Wh..
What is the present value of your windfall : You have just received notification that you have won the $2.1 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 70 years from now. Required: What is the pres..
What is the effective annual interest rate per month : This is a situation involving two friends. One borrows from the other $500, agreeing to pay back the loan principal plus $75 interest one month later. One year went buy and he did not pay back the loan. What is the effective annual interest rate per ..
Time-value-of-money : Time-Value-of-Money Question: A company plans to purchase an item at a cost of $260,000 with a service life of 8 years. At the end of the 8th year, the item has a salvage value of $40,000. Considering an interest rate of 7% per year, what would the a..
When would short-selling costs bite in this case : Suppose that there are no dividends paid by Google and the interest rate for borrowing or lending is 5% per annum. How could you make money if the June and December futures contracts for a particular year trade at $530 and $550, respectively? When wo..
Bonds make semiannual payments-what is current bond price : App Store Co. issued 15-year bonds one year ago at a coupon rate of 6.6 percent. The bonds make semiannual payments. Required: If the YTM on these bonds is 5.5 percent, what is the current bond price?
Increase in accounts receivable and decrease in inventory : Define each of the following as a SOURCE or USE of cash? Increase in Accounts Receivable: Decrease in Notes Payable: Decrease in Inventory: Increase in Accounts Payable: Granting credit to a customer: Increase in Common Stock:
How much value to the unlevered firm per dollar of debt : Given the following information, leverage will add how much value to the unlevered firm per dollar of debt? Corporate tax rate: 34%

Reviews

Write a Review

Financial Management Questions & Answers

  Money has a time value associated

Money has a time value associated with it. A dollar received today is worth more than a dollar received in the future. What role does inflation play when determining the value of a dollar? Explain.

  Formulate a zero-net-investment arbitrage portfolio

The one-year futures price on a particular stock-index portfolio is 406, the stock index currently is 400, the one-year risk-free interest rate is 3%, and the year-end dividend that will be paid on a $400 investment in the index portfolio is $5. Form..

  The target cash balance is reached when

The target cash balance is reached when:

  What is the current value of the company

Cavo Corporation expects an EBIT of $19,750 every year forever. The company currently has no debt, and its cost of equity is 15 percent. The corporate tax rate is 35 percent. What is the current value of the company? Suppose the company can borrow at..

  Nominal interest on retirement savings

A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% nominal interest on retirement savings.

  Pure discount government bond

A pure discount (or zero-coupon) government bond is issued today that promises to pay $10,000 in 5 years. If the current interest rate on similar bonds is 6%, what is the price of the bond? Recall that the compounding interval for bonds is 6 months.

  Investment to cover cost of your childs college education

Assume the total cost of a college education will be $410,000 when your child enters college in 15 years. You presently have $68,000 to invest. Required: What annual rate of interest must you earn on your investment to cover the cost of your child’s ..

  How leveraged lease differ from nonleveraged financial lease

How does a leveraged lease differ from a nonleveraged financial lease? What type of firm or organization is most likely to take advantage of the leveraged lease financing option?

  The yield to maturity on a bond

The yield to maturity on a bond is:

  Annual effective financing through his credit union

A buyer of a 2003 Protege S Hatchback has a choice of 0% financing for 60 months or a $3,600 rebate. He plans to make no down payment. The buyer is able to qualify for 7% annual effective financing through his credit union and thereby take advantage ..

  Issue of bonds with a maturity

Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semi annual interest payments. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6..

  Growth stocks outperform value stocks

Even though no final conclusion is currently warranted, a number of research papers, including those of Fama and French, have argued that: there is no noticeable difference in the returns of growth versus value stocks. growth stocks outperform value ..

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