Determine the present worth of a geometric gradient series of Contract B at an interest rate of 8% per year and has a cost of Php 10,000 in year 1; costs will escalate at 6% per year for 11 years. O a. P 93296 O b. P 92926 O c. P 93000 O d. P92296

Determine the present worth of a geometric gradient series of Contract B at an interest rate of 8% per year and has a cost of Php 10,000 in year 1; costs will escalate at 6% per year for 11 years. O a. P 93296 O b. P 92926 O c. P 93000 O d. P92296

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

See similar textbooks

Related questions

Q: Assume that a company has provided the following information regarding a capital investment…

A: Present value of a future amount With discount rate (r), period (n) and future amount (F), the…

Q: An investor has portfolio of shares consisting of P2,500 investment in each of twenty different…

A: Old beta of the portfolio (Po) = 3.00 New beta of the portfolio (Pn) = ? Beta of share sell (Bs) =…

Q: Kiambu County Government has received equipment worth Kshs.461,520,000 from an American Company…

A: Foreign exchange risk It is the losses that a international monetary exchange might bring about…

Q: 25) The current exchange rate between the Japanese yen and the U.S. dollar is ¥100 per dollar. If…

A: Depreciation of a currency implies that the currency has become cheaper. Thus, a lesser amount of…

Q: Explain the reason why the Employee Provident Fund (EPF) is known as a financial intermediary in…

A: EPF is financial organisation which manages retirement and savings needs of employees in private…

Q: What deposit at t=0 into a trust fund, that pays 5% annually, is required in. order to withdraw…

A: To calculate the amount of deposit required today we will use present value of perpetuity formula as…

Q: Assume the Black-Scholes framework holds. Consider an option on a stock. You are given the following…

A: Here, Stock Price is 50 Option Price is 3.00 Option Delta is 0.611 Option Gamma is 0.020 Option…

Q: If the manager of a gold mine wants to protect its operations against a market price decline, while…

A: It is a financial instrument whose value/price is determined by the given assets. Options, forwards,…

Q: Consider the following cash flows. The interest rate is 10%. What is the total wealth after 2 years…

A: It is given that: Year Cash flow 1 150 2 120 3 100 4 200 And the Expected…

Q: Which is false about Market efficiency? Advancement in trading technology pave way to increase…

A: Market efficiency can be explained as a theory that states that the price of the share is…

Q: lent on the payment date despite having a USD4,000 sale. (B) ABC Corporation pays a foreign-currency…

A: Step 1 Foreign currency rate changes can harm a given transaction before settlement, which is known…

Q: A project has an initial cost of $50 000, net annual cash inflows of $20 000, and a $2 000 salvage…

A: Rate of return is the return on the profit on investment, It can change the value of investment,…

Q: ou just won the NY State Lottery. The Grand Prize is $275 million. Lottery officials give you a…

A: Upfront payment $ 27,50,00,000.00 Periodic Payment 15000000 Time Period 25 Interest…

Q: 4. Which of the following is not a way to cope in times of financial difficulty? a. reduce use of…

A: The answer is Option (d). Rely on others for financial needs Relying on others for financial needs…

Q: Mang Moises needed a refrigerator for his canteen. The refrigerator, which costs P:26,000, may be…

A: In financing, amortization is the amount of loan, in which principal loan paid according to the…

Q: A 3-year, 1000 par value bond with a 2% annual coupon is trading to yield 4%. What is the current…

A: Par value = 1000 Coupon rate = 0.02 Annual coupon amount (a) = 20 (i.e. 1000 * 0.02) Yield (y) =…

Q: How much would be in your savings account in 8 years after depositing $300 today if the bank pays 8…

A: Present value = Future value/(1+required rate of return)^n. Use PV Function in excel Future value =…

Q: The rationales of Corporate Parents. Explain styles of Parenting – where do they potentially add or…

A: A corporate parent is a label given to an organization or someone with unique obligations for the…

Q: Mr. Dalisay applied for a bank loan with a principal of P150,000 to be paid after five years in…

A: Principal loan amount = P150,000 Loan period = 5 years Current market rate = 0.10 Principal will…

Q: Galaxy Satellite Co. is attempting to select the best group of independent projects competing for…

A: NPV and IRR are two techniques of capital budgeting. These techniques are used to evaluate the…

Q: A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of…

A: Depreciation expense = $68,109 Tax rate = 0.24 Depreciation tax shield is also known as saving of…

Q: 4. Solve problem 3, assuming that 50% of the initial investment is borrowed at an annual interest…

A: PW method: It is the method that is utilized to compare mutually exclusive alternatives that have…

Q: Using the corporate valuation model approach, what should be the company's stock price today?

A: Free cash flow = (EBIT*(1-T)) + Depreciation exp. - Capital expenditure - Changes in working capital…

Q: Bernard co. has 7% coupon bonds on the market that have 13 years left to maturity. The bonds will…

A: Current bond price will be equal to present value of Maturity Value and present value of interest…

Q: A fixed capital investment of P10,000,000 is required for a proposed manufacturing plant and an…

A: Fixed capital (F) = P 10,000,000 Working capital (W) = P 2,000,000 Depreciation (D) = 10% of F = P…

Q: Question Owing to perennial complaints by students about the lack of accommodation problems on…

A: Before investing in new projects, profitability of the project is evaluated by using various methods…

Q: An analyst is studying the movement of the stock ABC. His research and came up with a different…

A: Probability of Economic conditions; Strong (Ps) = 0.30 Normal (Pn) = 0.50 Weak (Pw) = 0.20 Rate…

Q: What is standard deviation? What type of risk does it measure

A: Standard deviation measures the risk of an investment regarding how it will fluctuate or deviate…

Q: Jamie turned 50 years old today. She has just contributed $2,000 to a retirement savings account ar…

A: As the amount is being deposited into the retirement account money grow with time and interest rate…

Q: 3) When firms increase their debt-equity ratio, we find: Group of answer choices The ROE always…

A: We know that debt is the cheaper source of finance, if any company uses more debts in capital…

Q: The cost of goods sold computations for Wildhorse Company and Blossom Company are shown below.…

A: The inventory turnover ratio is used to measure how quickly inventory is replaced or sold. The days…

Q: The real risk-free rate of interest, r*, is 3%. Inflation is expected to be 4% this year, 5 percent…

A: Yield on 10 years bond will be the risk free rate,inflation and maturity risk premium.

Q: Find the FUTURE VALUE in SIMPLE ANNUITY of each of the following scenarios where R is the regular…

A: Future Value of Ordinary Annuity refers to the concept which dictates the compounded value of a sum…

Q: Only answer question 1 to 3 You are a personal finance advisor at the BQ bank, and you receive in…

A: A mortgage is a loan on a property where the collateral is the property itself.

Q: corporate issue will be brought to the market at a spread of T+ 68bp. Explain what this means and…

A: Corporate bonds are issued with some benchmark interest rate and some addition to some benchmark…

Q: a factory savings plan, a workman deposits P 25 at the beginning of each month for 4 years, and the…

A: The amount being deposited at each month and that money grow with time and interest and period of…

Q: The Tech company. Inc. is currently making windfall profits from the sales of financial programming…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: AIX Investment Group considers two alternative portfolios. The risk and return characteristics of…

A: A risk adjusted return is the profit earned in an investment after taking the risk associated to it…

Q: Year 2016 Plant, Property, Equipment (Gross) Accumulated depreciation reported in 2020 Annual…

A: Solution:- Depreciation means the wear and tear cost of an asset. Now, since no such information is…

Q: What is the variance of returns for Security ABC

A: In finance we use variance of returns as a measure of risk that is inherent in a stock or a…

Q: Using the corporate valuation model approach, what should be the company's stock price today?

A: Free cash flow = (EBIT*(1-T)) + Depreciation exp. - Capital expenditure - Changes in working capital…

Q: aving a trading system is important? And why managing our

A: Trading system is very important for growth and development of economy and growth of financial…

Q: The following information was available for Concord Company at December 31, 2020: beginning…

A: Inventory turnover = cost of goods sold/Average inventory

Q: National Co. has a constant growth rate of 5%. The company pays out 70% of its earnings. National…

A: An optimal capital structure is an efficient and appropriate mix of debt and equity so that…

Q: Do you believe that elections have an impact on a country's Investments market (stocks, bonds,…

A: A share of ownership in a firm or corporation is referred to as stock. When a firm does well, stock…

Q: 4. In a CDS the accrual payment is a payment made by CDS to CDS and occurs when the defaults

A: In a CDS, the accrual payment is a payment made by a CDS buyer to a CDS seller and occurs when the…

Q: up to $700 monthly in order to repay the loan. Determine if it is enough for him to agree on this…

A: Loan payment: These represent periodic payments made by the borrower to the lender for the purpose…

Q: Discuss the Crowdfunding Campaign process with appropriate examples.

A: Crowdfunding is defined as the method or techniques used for raising the finances or funds from the…

Q: 4. If at the beginning of the 6th year the nominal rate drops to 12% compounded quarterly, what is…

A: Mortgage amortization refers to a schedule which is prepared to shows the periodic loan payments,…

Q: Initial investment in equipment Enitial investment in working capital $ 150,000 $ 30,000 $ 160,000 $…

A: The cash flow from the operation would be the after deduction of operating expenses and taxes and…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Determine the present worth of a geometric gradient series of Contract B at an interest rate of 8% per
year and has a cost of Php 10,000 in year 1; costs will escalate at 6% per year for 11 years.
O a. P 93296
O b. P 92926
O c. P 93000
O d. P 92296

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Find the nominal rate of an investment with duration of 4 and a half years compounded once a year. The present value of the investment is Php50,010 while the future value is Php60,072.82. 4% O 5% 6% O 3%
Suppose you wish to borrow Php 20,000,000 to buy a parcel of real estate. The lender is willing to lend the money at 10% per annum. Amortize the payments monthly over 10 years. AF: 0.0132150737,
Assume that you are preparing an amortization table for a three-year note with a stated and yield rate of 12% and 10%, respectively. The amount for cell C4 is computed by a. E3 x 10% b. E3 x 12% c. E3 x 5% d. E3 x 6%
Supposing there are two service contracts X and Z, both having an interest of 9% annually. Contract X costs P150,000 in the first year. Its cost will then rocket at a rate of 5% per year for 10 years. Contract Z has the same cost in year 1, but its cost will increase by 6% annually for 12 years. What will be the difference in each contract’s future value?
The spot price of an investment asset is $50. The asset pays sure income of $5 in 6 months and the annual effective risk-free rate is 3%. What is the three-year forward price? a. $46.35 b. $54.63 c. $$49.25 d. $60.02 e. None of the above
Q3. A chip supplier signs a 15 year contract worth RM430 million at year zero.Ã Calculate the equivalent equal annual payments over the length of the contract, assuming an interest rate of 10% per year. 4. What is the future value at year 3 of the following set of cash flows if the discount rate is 14%? Year Cash Flow 0 1 2 120 130 170 3 180 Format: 92756000 Format : 694
Calculate the future value of an investment if the annual interest rate is 9%, number of payments is 30, and each payment of $1000 is made at the end of the year. A. $102,893 B. $136,308 C. $108,212 O D. $98,234
What is the equivalent annual cost in years 1 through 9 of a contract that has a first cost of $72,000 in year 0 and annual costs of $17,000 in years 3 through 9? Use an interest rate of 9% per year. I just need help figuring out what n2 is equal to
19. Find the Macaulay and Modified durations of an investment that pays $2,000 at the end of year 2 and $3,000 at the end of year 5. Assume a level annual effective interest rate of i = 3%. Be sure to use the correct units for each answer.
An investment with a 3year life and a cost of #120000 generates revenue of #25000 in year1 #45000 in year2 and #65000 in year3. If the discount rate is 8% (i) what is the NPV of the investment. (ii) state whether the investment should be accepted or not and why. (Using the 12% as your second discount rate to solve the remaining part of the question under IRR.
An investment promises to pay $3,500 per year for the next three years and then $4,000 per year for the following two years. Assume a discount rate of 15% per year, how much should you pay for this investment Select one: a. $12,267 b. $9,700 c. $7,899 d. $9,500.00
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?