Exxon Limited is planning to acquire a new welding machine for $ 250,000 that willproduce a net income, after operating expenses, of $30,000 per year. If the company plansto keep the machine for eight years, what must be the market (resale) value be at the endof eight years to justify the investment? Company make a 16% annual return on everyinvestment.

Definition: Annual return on investment: Return gained on investment over a period of time which is…

Answered: what must be the market (resale) v nt?…

Business

Accounting

what must be the market (resale) v nt? Comnany make a 16% annual

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: A worker is paid OMR 5.000 per unit, and he produces 18 units in 7 hours. What would be his total…

A: Under the Straight-piece rate system, the payment is made to worker according to the number of units…

Q: A PRICE TAG OF P2,600.00 IS PAYABLE IN 60 DAYS BUT IF PAID WITHIN 30 DAYS IT WILL HAVE A 4%…

A: The question is based on the concept of Financial Management. Rate of Interest = Discount *…

Q: obligation of rs.7000 due in small n year at rate if discount of 7% cover table continuasly is…

A: The given problem can be solved using NPER function in excel. NPER function computes no. of years/…

Q: You enter in a long position in a 6x12 FRA at a LIBOR rate of 3.00% and a nominal value of $10M. (a)…

A: Solution:-The scenario in question involves holding a long position in a Forward Rate Agreement…

Q: If EAR is 20% with monthly compounding, what is the nominal rate? 15.29% 18.37% 20.99% 14.05%

A: Effective annual rate (EAR), is a rate that shows the total amount of interest that will be earned…

Q: 2. Calculate the forward per annum premium/discount given the following quotes Spot: £1= $1.4;…

A: It is a problem that requires calculating the forward premium or discount on an annual basis.Spot…

Q: A washer-dryer combination can be purchased from a department store by making monthly credit card…

A: For the calculation of purchase price, we need to use the following formula for annuity due where…

Q: NET PROFIT PER -0.01 -0.02 -0.03 -0.04 O O -0.05 + 1.38 1.40 1.42 1.44 1.46 1.48 1.50 1.52 1.54 1.56…

A: A call option buyer is expecting markets to go up and is betting on the increase in spot rate vis a…

Q: If a firm have contract with customer, they will deliver their goods in one year after every three…

A: Following is the answer to the given question

Q: PNC is offering a home equity loan of 1¾% per month. What is the APR?

A: Given information: Rate per month is 1 ¾ % which is equal to 1.75% Calculation of APR: Excel…

Q: If a 6-month T-Bill with a face value of $100 is purchased at a 8% annual discount, the buyer will…

A: Given information in question 6 month T bill Value at maturity = $100 Discount rate annual = 8%…

Q: A PRICE TAG OF P2,600.00 IS PAYABLE IN 60 DAYS BUT IF PAID WITHIN 30 DAYS IT WILL HAVE A 4%…

A: Rate of Interest = DiscountPrincipal - Discountx100

Q: ome instrument with a stated annual interest rate of 18% and offers weekly compounding has an…

A: The given problem can be solved using EFFECT function in excel. EFFECT function computes effective…

Q: Suppose you bought a 3 year CD for 22,000 with an APR of 3.76% compounded quarterly. How much…

A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper…

Q: One latest CCTV is selling for rm8000 can purchase for 25% down and 24 monthly payment at 8% per…

A: Introduction installment payment system may be defined as that type of payment method in which…

Q: An investment costs sh.150,000 and pays sh. 12,000 in perpetuity. If the interest rate is 9 percent,…

A: The payments flow which continues for indefinite period with equal amount and interval is called…

Q: Whadden National Bark is undertaking statec GAP analysis. In the one yoar time bucket, it holds $43…

A: Strategic gap analysis is a business management technique that requires an evaluation of the…

Q: A principal of amount C is invested today. The compound financial law is applied. For the first 5…

A: BECAUSE YOU HAVE POSTED MULTIPLE QUESTIONS, WE WILL ANSWER THE FIRST QUESTION ONLY, FOR THE…

Q: ETS offers 5-year CDs at 7.63% compounded quarterly and BOS offers a 5-year CD at a rate of 7.59%…

A: The calculation is:

Q: What is the retum on equity (RoE) If a 3x levered asset returns 10% assuming 7% borrowing cost?…

A: Leverage = 3 Return on assets (ROA) = 10%

Q: You are given the following information: A 183-day T-bill, face value $100, currently trading at a…

A: A T-Bill is a short-term debt security issued by the Department of the Treasury with maturities…

Q: The following parameters are provided:S = $40, K= $45, r = 5% (continuously compounded), Time to…

A: Put Call parity is a concept that shows the relation between the Call price, Put price and the…

Q: A 3 months GoP TBill issued at a discount rate of 9.5%. Calculate its equivalent yield? (360 days…

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

Q: How long will it take 51387.00 to accumulate to $1627.00 at 6% p.a. compounded semi-annually? Sue…

A: Given that, Present Value (PV)=$1,387 Future Value (FV)=$1,627 Interest rate (i)=6%/2=3% or 0.03…

Q: What is the EAR of an account that has a 6% APR if it compounds quarterly?

A: To calculate the EAR we will use the below formula EAR = (1+APR/M)M-1 Where APR - Annual…

Q: The current spot rate for USD/GBP is 1.058 - 1.086. If you were to buy £4,799,207 worth of dollars…

A: To calculate how much the dealer would make on your transactions, you need to consider the bid and…

Q: Company RJay RJay Sell-Mart Xenon Time to Expiration (months) 1 2 5 6 Strike 60 70 60 7.50 SO 62.77…

A: A call option gives the right but not the obligation to buy at the strike price.We can determine the…

Q: None

A: Step 1: Identify the current spot rate.Step 2: Calculate the appreciation factor.Step 3: Adjust the…

Q: Suppose you buy a S10,000 face value T-bill maturing in one month for $9,800, what's your effective…

A: The effective annual rate of interest is the actual or the real rate of interest paid or received…

Q: consider account APR of 4.6% find APY and daily compounding. Comment on how changing the…

A: APR and APY are two important concepts with reference to the interest rate. APR shows number of…

Q: Finance Calculate the price of an FRA (Forward Rate Agreement) that starts in 30 days and ends in 60…

A: Forward rate agreement It involves two parties. One pays fixed interest rate in exchange of the…

Q: if the simple discount rate is 20.041%. waht is the Future value of P 51,703 after 4 years and 8…

A: Future Value is calculated as: = Present Value * (1 + rate) ^ (number of years)

Q: The early payment discount being considered in change 3 is “3/20 net 90”. Calculate the effective…

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

Q: A price tog of 1200 is payable in 60 days. but If payed with 36 day, it will have a 3% discount,…

A: Here, Price Tag is 1200 Payable Days without discount is 60 days Payable Days with discount is 36…

Q: The following graph shows the contingency graph for sellers of euro call options, with a premium of…

A: Selling a call option, also known as writing a call option, is a strategy in options trading where…

Q: ETS offers 6-year CDs at 8.63% compounded quarterly and BOs offers a 6-year CD at a rate 8.59%…

A: We use the annual yield (ay) formula: Where, r = rate of interest n= no. of compounding periods…

Q: Complete the table using the information provided and assume a VAT rate of 15%: VAT EXCLUSIVE…

A: The VAT is the value added tax collected by sellers from the customer and is paid to government.

Q: Annualized Holding Period Returns An investor has a 5.5% HPR on a 11 month investment. What is the…

A: Annualized holding period return refers to annual return from holding an asset for a given period of…

Q: Red Company is coming up with an investment that pays 8% interest compounded semiannually. What is…

A: Effective Annual rate refers to the rate earned on savings account where compounding is done over a…

Q: ms of sale of 3/25, net 50. Calculate the effective annual rate. a-1. Calculate the effective…

A: Ans a)Given Payment terms 3/25, net 50Periodic Rate=Discount%/(1-Discount%)Periodic rate…

Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

Exxon Limited is planning to acquire a new welding machine for $ 250,000 that will
produce a net income, after operating expenses, of $30,000 per year. If the company plans
to keep the machine for eight years, what must be the market (resale) value be at the end
of eight years to justify the investment? Company make a 16% annual return on every
investment.

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

Introduction:

VIEW

Explanation:

VIEW

Conclusion:

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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

A 10-year floating rate (annually paid) security selling for 101.32 pays a rate based on a reference rate plus 50 basis points. Assume the current value of the reference rate is 7%. What is the discount margin? O +30.94 bps O -309.4 bps O -30.94 bps O +309.4 bps
Question: You have a customer who has a 620 fico score and their preferred product requires you to add 1/8th percent to the interest rate of 6 3/4% (30 year fixed rate). What is the P&I payment for this customer if they are putting 10% down on a sales price of $195,000? a. $1,152.91 b. $1,109.28 c. $1,138.29 d. $1,167.61 Please answer with explanation I will really upvote
Assume that you conduct a relative value trade and close it out after 34 days. Your 34-day return is 0.40%. Annualize this return as an effective annual yield (EAY). Assume that a year has 365 days
The spot rate: USD 1.21/EUR 2-year USD YTM=0.11% 2-year EUR YTM= -0.72%. Suppose that you invest in the strategy known as the "carry trade". What will be your profit/loss if the spot rate in 2 years is USD 1.00/EUR. PROFIT = $1,100 or THERE IS NO ARBITRAGE OPPORTUNITY IS AN INCORRECT ANSWER
6. A dealer quotes a customer 7.35% to borrow for one year with interest paid monthly. The customer prefers to pay interest quarterly. What rate should the dealer quote instead?
Determine which is the better investment: 5.2% compounded semiannually or 5.36% compounded quarterly. Round your answers to 2 decimal places. The 5.2% semiannual investment gives an effective rate of %. The 5.36% quarterly investment gives an effective rate of %. Therefore, the (Choose one) ▼investment is a better investment. X S
At a point in time, the asked (discount yield) of a 10,000 T-Bill is o.9%. How much is the price of this bill if the settlement date is on 77 days?
The 1-year spot rate is 8%p.a. effective. The term structure of 1-year effective forwardratesisasfollows: attimet=1therateis7%,attimet=2therate is 6%, at time t = 3 the rate is 5%. (a) Determine the term structure of spot rates. (b) A fixed income security pays £10 annual coupons and it is redeemed after 4 years for £100. Compute its price at time t = 0.
If the Loan-to-value Ratio is 75%, what is the Leverage Ratio? O a. 2.55 O b. 4.00 c. 3.50 Od 5.00 Oe 0.75
Consoder the following insurance company options: Company 1: pays 4.3% compounded monthly on the cash value of thier polocies Company 2: pays 4.32% compounded semiannually on the cash value of thier polocies What is the APY offered by each company? (round answers to nearest hundredth) Company 1 = Company 2 = Which company offers a higher yield?
More compound interest. Assume that a 24- month CD purchased for $7000 pays an APY of 4.25% (and of course interest is compounded). How much do you have at maturity? (Enter your answer to the nearest cent.)
Find the present value PV of the given future value. (Round your answer to the nearest cent.) future valye $5,250 at 4.875 simple interest for 670 days PV = $