Exercise 4 (Basic Net Present Value Analysis)On January 2, Pebbles Cruz paid P18,000 for 900 ordinary shares of RainbowCompany. Ms. Cruz received an P0.80 per share dividend on the shares at theend of each year for four years. At.the end of four years, she sold the share forP22,500. Ms. Cruz has a goal of earning a minimum return of 12% on all ofher investments.Required:(Ignore income taxes.) Did Ms. Cruz earn a 12% return on the share? Use thenet present value method and the general format. Round all computations tothe nearest whole peso.

Given: The cash outflow though Ms. Cruz is = P18,000 Shares value = 900 Life = 4 years The cash…

Answered: ebbles Cruz paid Cruz received an for…

Business

Accounting

ebbles Cruz paid Cruz received an for four years. A 'ruz has a goal of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Conrad's employer offers graded vesting plan. Every year after the first year, vesting increases 10%…

A: A graded vesting plan allows employees to gain ownership of the employer contribution. This means…

Q: A i) Mrs. S owns a freehold property in Jurong East, Singapore. She receives an income of dollar…

A: "As per the policy of our company, In case of multiple questions asked then, we are allowed to…

Q: Carrie Tune will receive $30,000 for the next 11 years as a payment for a new song she has written.…

A: The present value of Future payments or receipts is different. Which can be computed by multiplying…

Q: What is the value of this obligation two years before it is due to a man to whom money is worth…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: Buena Suerte won the "Ikiskis mo" contest. As her prize, she is given the following choices: a. to…

A: Given a certain rate of return, present value (PV) is the current worth of a future sum of money or…

Q: Sharon Nguyen has $25,000 to invest and believes that she can earn 6% compounded semiannually. Find…

A: Present Value = $25000 Interest Rate(r) = 6%/2 =3% semiannually Years =10 Terms(n) = 10*2 = 20

Q: Rean gets a job with a starting monthly salary of 20,000.She is promised by her employer to receive…

A: Rean’s monthly salary in first year will be $ 20,000 per month. Since she gets monthly increases of…

Q: At the beginning of 1965, Mr. A, 47 yrs old, signed a contract with Mrs. C, who claimed to be 90…

A: The PV of an asset is the total value of all the cash flows after they have been discounted to the…

Q: PhP200,000 as downpayment for a farm. The remaining amount is to be settled by paying PhP16,200 at…

A: Interest - The fee paid for the right to borrow money is called interest. In contrast to how the…

Q: Hange Zoe borrowed money to upgrade their battle equipment of Survey Corps in the lending company in…

A: First obligation (L1) = P 225000 after 1 year r1 = 10% Second obligation (L2) = P 320000 after 2…

Q: Boilermaker Design, Inc. (BD) has an employment contract with its newly hired CEO. The contract…

A: N = 3 Rate = 8% Future Value Required = 5,000,000

Q: Hannah plans to invest $125 at the end of each month into an RRSP for the next 5 years. If she earns…

A: We need to use financial calculator to solve this problem. The following inputs need N=Periods…

Q: Izni invested RM400 eight years ago earning 7% interest per year. If Izni spends all her interest…

A: Interest can be defined as the cost of borrowing. It is the cost or fees paid by the borrower to the…

Q: 16. Madison purchased a new car for $29,000. She was allowed $3,000 for her trade in and financed…

A: In the given question we are required to calculate monthly payment paid by madison for the purchase…

Q: a is Leon and Heidi decided to invest $2,750 annually for oply the first nine years of their…

A: Future Value Future value refers to the value of the investment at a certain point in time in future…

Q: Robert Chilufya’s employer offers its workers a two-month paid sabbatical every seven years. Robert,…

A: We need to calculate the accumulated value of an annuity at the end of the given term. This is a…

Q: Having earned a bonus at his work, Rick placed the money in an investment earning 5.06% compounded…

A: ParticularsValueWithdrew amount356Interest rate5.06%Number of year9

Q: Assume you won Loto-Quebec! Instead of receiving the prize as a lump sum payment, you choose to…

A: The total amount of money you make each year before deductions are your annual income. For example,…

Q: A contractor is calculating the present worth of the salaries of his five employees over the next…

A: Present worth refers to the amount present today that is more valuable than the amount will…

Q: Gabriel passed the IPHQ examination and his salary was raised by P30,000 starting from the end of…

A: We need to use present value of ordinary annuity formula to solve this problem Present value of…

Q: At the same rate of interest, Rachel lent $5000.00 to Monica for 2 years and $3000.00 to Chandler…

Q: Amir joined Takaful Sayang by paying RM400 per month. Takaful Sayang, with a contract mudharabah…

A: Present Value - Given a certain rate of return, present value (PV) is the current value of a future…

Q: 4.Mr. Alvin's daily rate is P740.25, and is given a sick leave of 25 working days. Suppose the sick…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: A. William’s basic annual salary is R240 000. He receives an annual bonus of 80% of his basic…

A: A certain percentage of salary of an employee is deducted as pension fund, employer may also…

Q: Theresita Guadalupe insured his life with an insurance company. Under the contract, she will pay a…

A: In the given case , if theresita guadalupe dies on the 5th year, then income of beneficiary will be…

Q: Marcella päid for a kitchen set over time, signing an installment contract that required monthly…

A: To calculate the value on the date of purchase, it is required to calculate the present value of all…

Q: Maria has just finished her thirty-second year with her company and is getting ready to retire.…

A: Expected to receive Social Security = 55% of Average Annual Salary Average Annual Salary = $ 62,544…

Q: At the end of the year, if Malek reaches his annual sales quota, he is given an extra $10,000. This…

A: At the end of the year, if Malek reaches his annual sales quota, he is given an extra $10,000. This…

Q: Having been suspended from doing any mission in the Village of Konoha, Naruto decided to borrow…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: Ralphearns $200, 000 per yearat Virtual Reality Solutions LLC,where he has worked for 10years.…

A: The objective of the question is to calculate Ralph's retirement payable from the defined benefit…

Q: Miguel buys a car costing $14,000. He agrees to make payments at the end of each monthly period for…

A: The monthly payment made toward the loan repayment includes both interest and the principal portion.…

Q: Assume that the prescribed rate for each quarter last year was 4%. Gerry received a loan from his…

A: Here asked for Multi question we will solve for 1st question as per the guidelines. If you need…

Q: Linda

A: We can use the formula for calculating compound interest to solve this problem: A = P(1 +…

Q: Rob borrowed $5,800 from Richard and signed a contract agreeing to pay it back 10 months later with…

A: In this we have to calculate the interest on both contracts and than get the final price.

Q: Charlie has $8,000 to invest for a period of 5 years. The following three alternatives are available…

A: The balance at the future date having a different rate of interest each year is calculated using the…

Q: Jose must choose between two job offers. The first job pays $62,000 for the first year. Each year…

A: Earning is the amount you make from working or doing a job. Earning is calculated by deducting total…

Question

Exercise 4 (Basic Net Present Value Analysis)
On January 2, Pebbles Cruz paid P18,000 for 900 ordinary shares of Rainbow
Company. Ms. Cruz received an P0.80 per share dividend on the shares at the
end of each year for four years. At.the end of four years, she sold the share for
P22,500. Ms. Cruz has a goal of earning a minimum return of 12% on all of
her investments.
Required:
(Ignore income taxes.) Did Ms. Cruz earn a 12% return on the share? Use the
net present value method and the general format. Round all computations to
the nearest whole peso.

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 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Federal Insurance Contributions Act (FICA)

Learn more about

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

Similar questions

Petrogazz convinced Mae Luna to play for their volleyball franchise for 3 seasons. They offered the player $1,000,000 in the 1st year, $2,500,000 in the 2nd year, and $3,000,000 in the 3rd year. Assuming end of year payments of the proceeds of the contract, how will we find the value of his contract today if Mae Luna has a discount rate of 12%, compounding semi-annually?
Jenny Dimon Just Joined the WNBA as a professional basketball player who will play for New York Liberty. The team have offered Jenny two different compensation arrangements. The first arrangement gives her $74,000 annually for the next two years. The second arrangement gives her $63.000 annually for the next two years and a 819.000 signing bonus today. The bonus will be paid Iminediately, and the salary will be paid monthly In equal amounts. You can Ignore any personal taxes In this example. What Is the value today of each compensation arrangement If the Interest rate Is 8 percent compounded monthly? (Do not round Intermediate calculations and round your mowers to 2 decimal places, e.g., 32.16.)
21
Billy accepts a 6%, 22,000 note due in 60 days. What is the total amount Billy will receive when the note comes due? Please show the work.
Benjamin receives an annual bonus of $1,000 and wants to invest it in an account that earns interest for the next 3 years. Below are the two options that he is considering putting his money into. Which of the following statements is true? Second time submitting please make asap Dont mind bubled answer was accident.
Charlie has $14,000 to invest for a period of 5 years. The following three alternatives are available to him: • Account 1 pays 6.00% for year 1, 9.00% for year 2, 11.00% for year 3, 13.00% for year 4, and 15.00% for year 5, all with annual compounding. • Account 2 pays 15.00% for year 1, 13.00% for year 2, 11.00% for year 3, 9.00% for year 4, and 6.00% for year 5, all with annual compounding. • Account 3 pays interest at the rate of 10.75576% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? Alternative 2 Year 5 Balance, Alternative 1: $ Year 5 Balance, Alternative 2: $ Year 5 Balance, Alternative 3: $ 3.123.14 4.380.38 1506
Deline inherits Goo coo. She decides to have it pond to her in two payments: one payment four years from now and the Second Payment twice the size of the payment light years from now, if money is worth 12,6% Compounded Quarterly, then the amount of money that Delive expects to receive eight years from now is? A. R888 783,67 B 888 317,96 C 444 391,83 D. 442 658198
4. Tom agrees to make equal payments at the end of each year for 10 years to pay all interest and principal in purchasing a land worth $1,250,000 cash. If money is worth 8% compounded annually, find the annual payment.
9
Zack Pallos receives $21,132 annually, Since he is paid monthly, how much does he receive each month?
David earned 10 percent on the $200,000 he invested in a special account at his credit union. Interest was paid semi-annually. His effective rate of interest was: Select one: a. 10.55% b. 10.25% c. 10.56% d. 15.75%
Mr. Bill purchased a new house for 110,000. He paid 20,000 down and agreed to pay the rest over the next 30 years in 30 equal end of the year payments plus 12 percent compound interest on the unpaid balance. What will these equal payments be?