P9-12 (similar to)E Question HelpNPV unequal lives. Singing Fish Fine Foods has $1,990,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additionfood service, The estimated after-tax cash flow of this project is $590,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this projeis $500,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4% and the appropriate discount rate for the wine section is 9.0%, use the NPV to determine which project SinginFish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change?If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion?$ 281272.71 (Round to the nearest cent.)If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section?$ 252,959.30 (Round to the nearest cent.)V project. (Select from the drop-down menu.)Based on the NPV, Singing Fish Fine Foods should pick the

Net present value is the present value of all the future cash flows in todays’s time. It is used in…

Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion? $ 281272.71 (Round to the nearest cent.) If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section? $ 252,959.30 (Round to the nearest cent.) V project. (Select from the drop-down menu.) Based on the NPV, Singing Fish Fine Foods should pick the

Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision change? If the appropriate discount rate for the deli expansion is 9.4%, what is the NPV of the deli expansion? $ 281272.71 (Round to the nearest cent.) If the appropriate discount rate for the wine section is 9.0%, what is the NPV of the wine section? $ 252,959.30 (Round to the nearest cent.) V project. (Select from the drop-down menu.) Based on the NPV, Singing Fish Fine Foods should pick the

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Little Kimi Clothiers can borrow from its bank at 18 percent to take a cash discount. The terms of the cash discount are 2/18 net 55. a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round the final answer to 2 decimal places.) Cost of not taking a cash discount b. Should the firm borrow the funds? % Yes ○ No
A store will give you a 5.00% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?
es Little Kimi Clothiers can borrow from its bank at 20 percent to take a cash discount. The terms of the cash discount are 3/25 net 85. a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round the final answer to 2 decimal places.) Cost of not taking a cash discount b. Should the firm borrow the funds? % 00 Yes O No
You wish to buy a $10,900 dining room set. The furniture store offers you a 2-year loan with an APR of 7.2 percent. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
You need a loan of $110,000 to buy a home. Calculate your monthly payments and total closing costs for each choice below. = Choice 1: 15-year fixed rate at 4% with closing costs of$1600 and no points. Choice 2: 15-year fixed rate at 3.5% with closing costs of$1600 and 3 points. What is the monthly payment for choice 1? $_______ (Do not round until the final answer. Then round to the nearest cent as needed.) What is the monthly payment for choice 2? $_____ (Do not round until the final answer. Then round to the nearest cent as needed.) What is the total closing cost for choice 1? $_____ What is the total closing cost for choice 2? $_____ Why might choice 1 be the better choice? A.The monthly payment is lower. B. The closing costs are lower. C. The monthly payment is higher. D. The closing costs are higher. Why might choice 2 be the better choice? A. The closing costs are lower. B. The monthly payment is lower C. The monthly payment is higher. D. The closing…
Ricky Ripov’s Pawn Shop charges an interest rate of 18.25 percent per month on loans to its customers. Like all lenders, Ricky must report an APR to consumers. a. What rate should the shop report? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Simple Simon's Bakery purchases supplies on terms of 1.1/10, net 25. If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of 10.6% on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Hint: Use 365 days for a year.) The cost of forgoing the discount is %. (Round to one decimal place.) Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Select the best choice below.) A. Simple Simon's should enter into the loan agreement but not begin taking the discount. B. Need more information to answer the question. OC. Simple Simon's should enter into the loan agreement with the bank and begin taking the discount. D. Simple Simon's should not enter into the loan agreement but should begin taking the discount.
A firm offers terms of 1.2/10, net 60. a. What effective annual interest rate does the firm earn when a customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What effective annual interest rate does the firm earn if the terms are changed to 2.2/10, net 60, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What effective annual interest rate does the firm earn if the terms are changed to 1.2/10, net 75, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d. What effective annual interest rate does the firm earn if the terms are changed to 1.2/15, net 60, and the customer does not…
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please quickluy , thanks 27. Caterpillar purchased merchandise from Alpha echnologies as follows: Invoice date: March 12th Invoice Amount: $4,000 Terms: 2/10, n/30 If we assume an annual interest rage of 6% and a 360-day year. And Caterpillar has to borrow money for the remaining 20 days of the credit period. How much are the savings from taking the discount? A.19.6 B.66.93 C.13.07 D.6.67
You want to buy a new sports coupe for $87,500, and the finance office at the dealership has quoted you an APR of 6.9 percent for a 48-month loan to buy the car. a. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Monthly payment b. Effective annual rate %
You wish to buy a $9,700 dining room set. The furniture store offers you a 2-year loan with an APR of 9 percent. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

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