On January 1, 2024, Water World Issues $24.8 million of 6% bonds, due in 20 years, with interest payable semiannually onJune 30 and December 31 each year. Water World Intends to use the funds to build the world's largest water avalancheand the "tornado"--a giant outdoor vortex in which riders spin in progressively smaller and faster circles until they dropthrough a small tunnel at the bottom.Exercise 9-22 (Algo) Part 33-a. If the market rate is 7%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1)3-b. Will the bonds issue at face amount, a discount, or a premium?Answer is not complete.Complete this question by entering your answers in the tabs below.Req 3aReq 3bIf the market rate is 7%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Note: Use tables, Excel,or a financial calculator. Enter your answers in dollars not in millions (i.e., $5.5 million should be entered as 5,500,000). Roundyour final answers to the nearest whole dollar.)Bond CharacteristicsAmountFace amount$24,800,000Interest payment$744,000Number of periods40Market interest rate3.5%Issue price$26,435,893x

Step 1: Let us first identify the givenBond pricing refers to the process of determining the…

Answered: On January 1, 2024, Water World Issues…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Current Attempt in Progress Sandhill Corp. management is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45 percent. The cost of this project will be $9,965,338. It will result in additional cash flows of $2,080,200 for the next eight years. The discount rate is 13.19 percent. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) a. What is the payback period? (Round answer to 2 decimal places, e.g. 15.25) The project's payback period is years b. What is the NPV for this project? (Round intermediate calculations and final answers to 0 decimal places, e.g. 1,251. Do not round…
F3. Polycorp Steel Division is considering a proposal to purchase a new machine to produce a new product for a eight-year contract. The new machine will cost $10 million. The firm intends to use $6,000,000 in equity and $4,000,000 in debt to finance the project. The debt will be repaid over eight years in equal annual, end of year payments. The interest rate is 5%pa. The machine has an estimated life of 8 years for accounting and taxation purposes. Installation will cost a further $500,000. Installation costs are capitalised and added to the cost of the machinery for depreciation and investment allowance calculations. The contract will not continue beyond eight years and the equipment has an estimated salvage value at the end of eight years of $800,000. The tax rate is 30 percent and is payable in the year in which profit is earned. An investment allowance of twenty percent on the outlay plus installation costs is available (only in the first year). The after-tax cost of capital is…
ICE (Week 12, Lesson 123 Winter 2024 HRMNTO1-4 Launa Vaughan A. MODERNIZATION CASE (10 Marks) Management is contemplating investing $1.5 million to modernize a plant and they would like to get a 20% internal rate of return. Should they go ahead with the decision? The economic life of the project is estimated at 10 years. The savings (or cash inflows) are estimated at $300,000 per year. The cost of capital is 14%. Required:Calculate the Net Present Value of the project? (2 marks) What is the approximate IRR of the project? (2 marks) What is the payback of the project? (1 mark)Should management go ahead with the project? Why or why not? (2 marks) What factors, if they changed, would impact your decision? (3 marks)
A 3. The Blue Sky Ski Resort plans to install a new chair lift. Construction is estimated to require an immediate outlay of $220 000. The life is estimated to be 15 years, with a salvage value of $80 000. Cost of clearing and grooming the new area is expected to be $30 000 for each of the first three years of operation. Net cash inflows from the lift are expected to be $40 000 for each of the first 5 years and $70 000 for each of the following 10 years. Calculate the rate of return for their investment (Please solve without excel using trial and error method)
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3.44 A company is about to invest in a joint venture research and development project with another company. The project is expected to last eight years, but yearly payments the company makes will begin immediately (i.e., a payment is made today, and the last payment is eight years from today). Salaries will account for $40 000 of each payment. The remainder of each payment will cover equipment costs and facility overhead. The initial (immediate) equipment and facility cost is $26 000. Each subsequent year the figure will drop by $3000 until a cost of $14 000 is reached, after which the costs will remain constant until the end of the project. (a) Draw a cash flow diagram to illustrate the cash flows for this situation. (b) At an interest rate of 7%, what is the total future worth of all project payments at the end of the eight years?
3. Problem 11.03 (MIRR) eBook Problem Walk-Through Project L requires an initial outlay at t = 0 of $55,000, its expected cash inflows are $13,000 per year for 9 years, and its WACC is 9%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. BE %
Part 1 A state establishes a sinking fund of $300 million for bonds that will mature in 20 years. How much money (in dollars) must be deposited at the end of each month into an account that earns an annual interest rate of 2% combounded monthly to retire the $300-million bond debt? (Round your answer to the nearest cent.) Part 2 The winner of a lottery chooses to receive annual payments of $180,000 at the end of each year for 25 years. If the current interest rate is 5.9%, find the present value (in dollars) of the payments (Round your answer to the nearest cent.)
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