Question 4 (3 points) On January 1, KuchuKuchu Company invested in an asset with auseful life of 3 years. The company'sexpected rate of return is 10%. The cashflow and present and future value factorsfor 3 years are as follows:Year Cash Inflow from Present value Future valuethe Assets of P1 at 10% of P1 at 10%1P8,0000.911.10P9,0000.831.213P10,0000.751.33All cash inflows are assumed to occur at year-end. If theasset generates a positive net present value of P2,000,what was the amount of the original investment?

Solution: Amount of original investment = Present value of cash inflows - NPV Present value of…

Answered: Question 4 (3 points) On January 1,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Chapter 3 Financial Mathematics (Exercises) Future Value Calculations Exercise 1: (answers on page 347) 1) A factory purchases new equipment which costs R5,2 million. It depreciates at a rate of 12,5% per annum on a reducing balance. The replacement cost of the equipment escalates at a rate of 7,5% per annum. A sinking fund is set up to pay for the new machinery in 6 years' time. If the sinking fund earns 9% p.a. compounded monthly, determine: a) The book value of the old equipment in 6 years' time. b) The cost of the new equipment in 6 years' time. C) The value the sinking fund must attain, if the book value of the current equipment is used towards the cost of the new equipment. d) The monthly payments that need to be made into the sinking fund if payments commence one month after the current equipment is purchased and will continue until the new equipment is purchased. The
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A6) Finance A financial instrument provides three future cash flows: $1,710.00 at the end of 3 years $1,051.74 at the end of 8 years $2,105.93 at the end of 14 years Calculate the duration (D) of the financial instrument at a yield of 6% pa compounded yearly. Give your answer in years to 2 decimal places. D = years
A financial instrument provides three future cash flows: 1. $1,406.01 at the end of 2 years 2. $2,596.43 at the end of 8 years 3. $1,172.62 at the end of 13 years Calculate the duration (D) of the financial instrument at a yield of 7% pa compounded yearly. Give your answer in years to 2 decimal places. D years
PART B From Part A above, assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for initial year). Nivea-Corporation invested the amount in a project and generated the following sequence of cash flows over six years: Year Cash Flow ($ million) 0 -59.00 1 4.00 2 5.00 3 6.00 4 7.33 5 8.00 6 8.25 1.Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV use an interest rate of 10%
Assignment 3 Ch.5 Name / ID/ Section / Q1/ Ipswich Corporation is investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. considering an Present value of an ordinary annuity of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 1.69 1.668 1.647 1.626 2.402 2.361 .322 2.283 3.037 2.974 2.914 2.855 Present value of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project SR875,000 Investment Residual value Operating income Year I 120,000 Year 2 120,000 Year 3 120,000 Year 4 120,000 Year S Q3/ Your grandfather would like to share some of his fortune…
Subject-Acounting
Ñ5
QUESTION 3 A company has the project cashflow presented in the table below. If the inflation-free interest rate is 12% per year and the inflation rate is 4% per year, determine the Present Worth of the company's cashflow. Cashflow Item Amount First Cost -18,000 Annual Operating Cost Salvage Value No. of Years -7500 5000 10
7 Present work in Excel Consider the following: Financed amount: $385,000 Cost of funds: 7.25% (interest rate) 30-year amortization Calculate (round to nearest dollar): Annual payment amount (this is monthly payment x 12 --- then rounded to nearest dollar) Amount of 'Interest paid' during year 3 (rounded to nearest dollar) Amount of 'Principal paid' during year 3 (rounded to nearest dollar)
5-8 present and future values of a cash flow stream.An investment will pay $100 at the end of each of the next 3years $200 at the end of year 6. If other investment of equal risk earn 5% annually what is it's present value? it's future value
Current Attempt in Progress Sunland Company is considering an investment that will return a lump sum of $900,000, 6 years from now. Click here to view the factor table 1. Table 2 Table 3 Table 4 What amount should Sunland Company pay for this investment to earn an 12% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 5.24571. Round answer to 2 decimal places, e.g. 25.25.) Sunland Company should pay $Current Attempt in Progress Lamb Company deposited $15,000 annually for 6 years in an account paying 5% interest compounded annually. Click here to view the factor table 1. Table 2 Table 3 Table 4 What is the balance of the account at the end of the 6th year? (Round answers to 2 decimal places, e.g 2552.75.) Amount $

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