Example 17: Big B Company is cyaluating a proposalto accjuire an automated welding machine for its smallparts assembly department. The cquipment costsž6,80,000 plus the companý would havc to pay a 5%salcs tax on the purchase and spend 720,000 for freightund installation. The equipment has a useful life of 10years and is cxpected to produce cost savings of1,57,500 per year. There is no salvage value.Company's policy is not to fund any capital projectwhose internal rate of return is below the company's16% cost of capital.Required:1) Compute thc payback on the project.2) Compute the net present valuc of the project.

Answered: Image /qna-images/answer/22141e66-647c-48b6-b732-019d2217df8f.jpg

Answered: Required: 1) Compute the payback on the…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Prove that the accumulation function associated with the force of interest satisfies the principle of consistency.
Mr. Tan call his resident wife and deposited P100,000 to their joint account and the P100,000 is to be invested in the cooperative. The time deposit on bank is a 5 year term with interest rate at 7% while the other deposit to the cooperative is 1 year time deposit at 5% interest rate. (1) Compute for the interest earned after maturity date on the deposits (2) Compute for the final tax rate for the deposits. (3) Suppose that the time deposit in the bank was pre-terminated at year (4) what is the final tax rate?
Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 13 percent while its cost of equity is 17 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield. What will be JB's WACC? (Round your answer to 2 decimal places.
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4. An insurer issues a 15-year annual premium-due endowment insurance of $100,000 benefit to life (50). The insurer charges an initial expenses of $ 1000 plus renewal expenses of 5% of each subsequent premium after the first premium payment. The premiums are made at the beginning of each year when (50) remains alive before reaching 70 and the benefit is paid at the end of K50 +1 years or when the person reaches the age 70 whichever occurs earlier. (a) Write down the gross future loss random variable L in terms of actuarial notations. (b) Calculate the gross premium-due G by using the Standard Select Survival Model with 5 % per year interest (Table D4) and the equivalence premium principle. 8 (c) Calculate the gross premium policy value V by using the equivalence premium G found in (b).
You are chairperson of the investment fund for the Continental Soccer League. You are asked to set up a fund of semiannual payments to be compounded semiannually to accumulate a sum of $210,000 after eight years at a 10 percent annual rate (16 payments). The first payment into the fund is to take place six months from today, and the last payment is to take place at the end of the eighth year. Use Appendix A and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. Determine how much the semiannual payment should be. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Semi-annual payment On the day after the sixth payment is made (the beginning of the fourth year), the interest rate goes up to an annual rate of 12 percent. This new rate applies to the funds that have been accumulated as well as all future payments into the fund. Interest is to be compounded semiannually on all…
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2. For a 3-year term insurance at age x with death benefit of 1,000 (with death benefit payable at end of year), you are given : i. Px = .97 ii. i= 6% The present value of death benefits at age x is 153. The net level annual premium is 56 (with premium payable in advance for 3 years subject to survival). Calculate px+2 iii. iv.
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17) Determine the simple Interest Rate applied to a Principle of $100,250 over 10 years if the total interest paid equals the Principal.

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Required: 1) Compute the payback on the project. 2) Compute the net present value of the project.