You invest $5,000 in a stock that is expected to grow at an annual rate of 8%. What will be the value of the investment after 3 years? A. $6,000 B. $6,444 C. $6,744 D. $7,000 A company purchased equipment for $12,000. The equipment has an estimated residual value of $2,000 and a useful life of 5 years. What is the annual depreciation expense using the straight-line method? A. $1,600 B. $2,000 C. $2,400 D. $2,800

Fargo Cop, is considering the purchase of a new piece of equipment. The equipment costs $51,400 and will have a salvage value of $6,400 after nine years. Using the new piece of equipment will increase Fargo's annual cash flows by $7,400. Fargo has a hurdle rate of 13%. a. How much is Fargo's annual depreciation on the equipment? DepreciaSon b. What is Fargo's projected annual increase in net income? Net Income c. What is the accounting rate of return for purchasing the new plece of equipment? (Round your answer to 2 decimal places.) Rate of Retum

Suppose an industrial building can be purchased for $2,500,000 and is expected to yield cash flows of $180,000 in each of the next five years. (Note: assume payments are made at end of year.) If the building can be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five-year holding period.   A) 0.09%. B) 4.57%. C) 9.20%. Page 4 of 6 D) 10.37%

Jitihadi Itd intends to invest in a project whose cost is sh 1,200,000. The project is expected to have a useful life of 5 years with a residual value of shs 200,000. The following are the expected profits before depreciation and taxes for 5 years. Year Profit before depreciation and tax (shs) 1 480,000 2 320,000 600,000 4 450,000 500,000 Additional information: i. The company uses straight line method in calculating depreciation. ii. The corporation tax rate is 30% iii. The cost of capital is 12% Required: i. Calculate the net present value of the project ii. Advice the management whether the project is viable

You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment 1 $ 78 38 40 12 14 Year a. Total value b. Laputa's equity 2 $ 98 48 50 15 17 3 $ 113 53 60 18 20 4 $ 118 58 60 18 22 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 13%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.

The data required for a new investment are calculated as follows:Cost of the investment: 10.000.000 $Cost of capital (discount rate): 25%Economic life of the investment: 5 yearsTax rate: 40%Normal depreciation method is applied.What will be the net present value of the investment if the depreciation and pre-tax profit  that the company expects from the investment every year for 5 years is 7,000,000 $?

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6. A company will invest $37,072 on a capital expenditure (an asset with multi-year use). They estimate it will save $25,166 per year for the next 2 years. If their TVOM is 5.89%, what is the worth of the investment per year? (be sure to include the sign)

You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment Answer is complete but not entirely correct. a. Total value b. Laputa's equity 1 $ 86 26 60 18 15 $ $ Year 629 x 377 2 $ 106 36 70 21 18 3 $ 121 41 80 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 60% by equity and 40 % by debt. Its cost of equity is 17%, its debt yields 8%, and it pays corporate tax at 30%. 24 21 a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest…

5. Armor Investment Company is considering the acquisition of a heavily depreciated building on 10 acres of land. It expects to rent the building as a storage facility and expects to collect cash flows equal to $100,000 next year. However, because depreciation is expected to increase. Armor expects cash flows to decline at a rate of 4 percent per year indefinitely. Armor expects to earn an IRR on investment return (r) at 13 percent. a. What is the value of this property? b. Assume that after five years the building could be demolished and the land could be redeveloped with a strip retail improvement. The latter would produce NOI of $200,000 per year, grow at 3 percent per year, and cost $1 million to build. Investors currently earn a 10 percent IRR on such investments. How would this affect your estimate of value in (a)?