Reference no: EM131268959
Capital Budgeting Quiz
1. What is the present value of a fund that earns 18% on its balance each year, from which $10,000 must be paid a year for 5 years, after which the balance of the fund will be zero?
2. If we invest $20,000 in a company that earns 8% per year on invested capital, and if they reinvest the earnings, how much is the investment worth at the end of 10 years?
3. A company can invest in a project that will raise its revenues by $7,000 per year after taxes. The project costs $30,487.10 initially and has an anticipated life of 6 years. If the company can earn 12% after taxes on capital invested in other projects, how much would the firm lose if it invested in the proposed project?
4. Find the payback period and the internal rate of return for the project described in problem 3.
5. It is desired to repay a loan of $20,000 in 12 equal annual installments, where the loan earns interest at the rate of 10% per year. How much should be paid each year?
6. The US EPA has determined that cleaning up the local watershed so it will meet healthy water standards will cost $300 million. They support their claim for the need to do this project by saying that the economic value of the healthy water to the citizens in the area is $15 million dollars per year in lower health costs, recreation, and quality of life. These benefits are expected to continue for 50 years. The opportunity cost on government money is normally the current rate of treasury bills which is 3%/year. Using Benefit/Cost Analysis determine if this use of government money makes sense. What is the minimum amount of annual benefit that is needed to justify this spending?
7 Compute the present value of $10,000 to be received in 30 years, if interest of 8% per year is compounded (a) annually, (b) quarterly. How do you explain the difference in your results?
8. A department store offers the following credit terms on a new appliance "slashed" to a price of $420: only $40 down, and the balance in 24 monthly installments of $25. What monthly interest rate is the company implicitly charging its credit customers?
|
Determine the total impedance of the circuit at resonance
: Calculate the voltages VR, VL, and VC at resonance. How are VL and VC related? How does VR compare to the applied voltage E?
|
|
Why does the united states intervene in spanish cuba
: Why does the United States intervene in Spanish Cuba and what results flow from this intervention? Who supports empire? Who opposes it?
|
|
Patients are arriving at clinic at rate of two per minute
: Patients are arriving at a clinic at a rate of two per minute. Each patient’s visit consists of four steps: check in, record vital signs, receive treatment, and check out. A receptionist takes 1 minute to check a patient in.
|
|
Why is the building of panama canal important to the us
: Why is the acquisition and building of the Panama Canal important to the U.S.? What is the Roosevelt Corollary and how does this impact American policy towards Latin America? Discuss, providing examples.
|
|
What is the present value of a fund
: What is the present value of a fund that earns 18% on its balance each year, from which $10,000 must be paid a year for 5 years, after which the balance of the fund will be zero?
|
|
Find quadratic regression equation for the price demand data
: Find a quadratic regression equation for the price demand data, using x as the independent variable.- Find a linear regression equation for the cost data, using x as the independent variable.
|
|
Who were the numerous candidates running
: Who were the numerous candidates running in 1912, noting their parties and their ideas about what should happen in the US. What happened? Who won and why? Why might this have changed the path of country?
|
|
Find the power dissipated at resonance
: A series circuit has a resonant frequency of 10 kHz. The resistance of the circuit is 5 Ω, and XC at resonance is 200 Ω.
|
|
Concept of pure competition
: Can you identify a market in the health care industry that would approach this concept of "pure competition"? How do competitors compete in this type environment?
|