CORPORATE FINANCE--CONNECT ACCESS CARD
12th Edition
ISBN: 9781264331062
Author: Ross
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 4, Problem 19QAP
Calculating Number of Periods One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment schedule of $400 per month. You will charge 1.1 percent per month interest on the overdue balance. If the current balance is $16,450, how long will it take for the account to be paid off?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
what is the firms' weighted average cost of capital? please show me weight calculation for each capital source.
A small manufacturer is considering an equipment replacement
project. The new equipment would have an installed cost of
$125,000 and would replace existing equipment that was
purchased 3 years ago at an installed cost of $80,000. If the
company moves forward with the replacement, it could sell the
old equipment for $25,000. Purchasing the new equipment
would result in the company's current assets increasing by
$12,000 and current liabilities increasing by $9,000. The
company uses the 5-year MACRS table for depreciation, and is taxed at
21%.
a) What is the accumulated depreciation of the old equipment?
b) What is the current book value of the old equipment?
c) What is the amount of depreciation recapture/recovery?
d) What is the tax on the sale of the old equipment?
e) What are the after-tax proceeds from the sale of the old
equipment?
f) What is the change in Net Working Capital?
g) What is the initial investment for the project?
Last year Lewis Bank paid an annual dividend of $7 per share. The
bank expects the growth of its dividends to be stable at 2% per
year going forward.
a) If investors require an 8% return, what is the current value of
Lewis Bank's stock? (round to nearest cent)
b) If the stock currently trades at $124.55 per share, what is the
dividend growth rate investors expect? (round to nearest
percent)
Chapter 4 Solutions
CORPORATE FINANCE--CONNECT ACCESS CARD
Ch. 4 - Prob. 1CQCh. 4 - Prob. 2CQCh. 4 - Prob. 3CQCh. 4 - Prob. 4CQCh. 4 - Time Value On subsidized Stafford loans, a common...Ch. 4 - Prob. 6CQCh. 4 - Prob. 7CQCh. 4 - Prob. 8CQCh. 4 - Prob. 9CQCh. 4 - Prob. 10CQ
Ch. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Prob. 2QAPCh. 4 - Prob. 3QAPCh. 4 - Calculating Interest Rates Solve for the unknown...Ch. 4 - Prob. 5QAPCh. 4 - Prob. 6QAPCh. 4 - Prob. 7QAPCh. 4 - Calculating Rates of Return Although appealing to...Ch. 4 - Prob. 9QAPCh. 4 - Prob. 10QAPCh. 4 - Present Value and Multiple Cash Flows Specter Co....Ch. 4 - Prob. 12QAPCh. 4 - Calculating Annuity Present Value An investment...Ch. 4 - Prob. 14QAPCh. 4 - Prob. 15QAPCh. 4 - Prob. 16QAPCh. 4 - Calculating EAR First National Bank charges 11.4...Ch. 4 - Prob. 18QAPCh. 4 - Calculating Number of Periods One of your...Ch. 4 - Prob. 20QAPCh. 4 - Prob. 21QAPCh. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Calculating Annuities You are planning to save for...Ch. 4 - Prob. 24QAPCh. 4 - Prob. 25QAPCh. 4 - Prob. 26QAPCh. 4 - Prob. 27QAPCh. 4 - Prob. 28QAPCh. 4 - Prob. 29QAPCh. 4 - Prob. 30QAPCh. 4 - Calculating Interest Expense You receive a credit...Ch. 4 - Prob. 32QAPCh. 4 - Growing Annuity Southern California Publishing...Ch. 4 - Prob. 34QAPCh. 4 - Prob. 35QAPCh. 4 - Prob. 36QAPCh. 4 - Prob. 37QAPCh. 4 - Calculating Loan Payments You need a 30-year...Ch. 4 - Prob. 39QAPCh. 4 - Prob. 40QAPCh. 4 - Prob. 41QAPCh. 4 - Prob. 42QAPCh. 4 - Prob. 43QAPCh. 4 - Prob. 44QAPCh. 4 - Prob. 45QAPCh. 4 - Prob. 46QAPCh. 4 - Prob. 47QAPCh. 4 - Prob. 48QAPCh. 4 - Prob. 49QAPCh. 4 - Prob. 50QAPCh. 4 - Prob. 51QAPCh. 4 - Prob. 52QAPCh. 4 - Prob. 53QAPCh. 4 - Prob. 54QAPCh. 4 - Prob. 55QAPCh. 4 - Prob. 56QAPCh. 4 - Prob. 57QAPCh. 4 - Prob. 58QAPCh. 4 - Prob. 59QAPCh. 4 - Prob. 60QAPCh. 4 - Prob. 61QAPCh. 4 - Prob. 62QAPCh. 4 - Prob. 63QAPCh. 4 - Prob. 64QAPCh. 4 - Prob. 65QAPCh. 4 - Prob. 66QAPCh. 4 - Prob. 67QAPCh. 4 - Prob. 68QAPCh. 4 - Prob. 69QAPCh. 4 - Prob. 70QAPCh. 4 - Prob. 71QAPCh. 4 - Prob. 72QAPCh. 4 - Prob. 73QAPCh. 4 - Prob. 74QAPCh. 4 - Rule or 69.3 A corollary to the Rule of 72 is the...Ch. 4 - Prob. 1MCCh. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - Prob. 4MCCh. 4 - Prob. 5MC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- A food processing company is considering replacing essential machinery. Cost and relevant cash flow details are provided in the table at the right. The company requires an 11% return on its capital. a) What is the present value of the yearly cash flows? Use a Time Value of Money function for full credit. (round to nearest dollar) b) What is the net present value of the project? (round to nearest dollar) c) What is the internal rate of return of the project? Use a Time Value of Money function for full credit. (round to two decimal places)arrow_forwardBarnsa is planning to raise a total of $5,000,000 with a bond issue. Each of the bonds has a face (par) value of $1,000 and coupon rate of 4%. The company's applicable tax rate is 21%. a) What is the annual coupon payment, per bond, that investors expect to receive? b) What is the total after-tax annual interest expense to Barnsa?arrow_forwardA team of analysts is using a two-stage variable growth model to estimate the value of GNC's common stock. The most recent annual dividend paid by GNC was $4 per share. The analysts expect dividends to increase 7% per year for the next 3 years and then drop to 3% starting in year 4 and remain at that rate for the foreseable future. The required rate of return used for the analysis is 8%. a) What are the expected dividends for the next 4 years? b) What is the value of the stock attributable to the first 3 years of dividends? (use NPV function) c) What is the value of the stock at the end of year 3? (use constant-growth model) Use a cell reference in the numerator to get an unrounded, more precise, answer figure. d) What is the value of the stock attributable to years 4 and beyond? (use pv function, where answer to part C is the fv) e) What is the total value of GNC stock?arrow_forward
- An investor is buying a bond that pays semi-annual interest. The par value is $900 and the coupon rate is 6%. The investor plans to hold the bond to its maturity, which is 5 years from now. If her typical required rate of return is 7%, what is the most the investor should pay for the bond? Use a Time Value of Money function for full credit. (round to nearest cent)arrow_forwardIRR: Mutually exclusive projects Nile Inc. wants to choose the better of two mutually exclusive projects that expand warehouse capacity. The projects' cash flows are shown in the following table: The cost of capital is 18%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) Is project X acceptable on the basis of IRR? (Select the best answer below.) Yes No The internal rate of return (IRR) of project Y is %. (Round to two decimal places.) Is project Y acceptable on the basis of IRR? (Select the best answer below.) ○ Yes Ο No b. Which project is preferred? (Select the best answer below.) A. Project X B. Project Y C. Neitherarrow_forwardA preferred stock has a par value of $105 and pays an annual dividend of 3% of par. If similar investments have an annual rate of return of 5%, what is the current value of this preferred stock. (round to nearest cent)arrow_forward
- Common stock value-Variable growth Lawrence Industries' most recent annual dividend was $1.82 per share (Do = $1.82), and the firm's required return is 15%. Find the market value of Lawrence's shares when dividends are expected to grow at 30% annually for 3 years, followed by a 6% constant annual growth rate in years 4 to infinity. The market value of Lawrence's shares is $ (Round to the nearest cent.)arrow_forwardDepreciation A firm is evaluating the acquisition of an asset that costs $68,400 and requires $3,990 in installation costs. If the firm depreciates the asset under MACRS, using a five-year recovery period (see table |), determine the depreciation charge for each year. The annual depreciation expense for year 1 will be $ The annual depreciation expense for year 2 will be $ The annual depreciation expense for year 3 will be $ The annual depreciation expense for year 4 will be $ The annual depreciation expense for year 5 will be $ The annual depreciation expense for year 6 will be $ (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.)arrow_forwardIntegrative Risk and valuation Giant Enterprises' stock has a required return of 15.9%. The company, which plans to pay a dividend of $2.22 per share in the coming year, anticipates that its future dividends will increase at an annual rate consistent with that experienced over 2016-2022 period, when the following dividends were paid: a. If the risk-free rate is 6%, what is the risk premium on Giant's stock? b. Using the constant-growth model, estimate the value of Giant's stock. (Hint: Round the computed dividend growth rate to the nearest whole percent.) c. Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock. a. If the risk-free rate is 6%, the risk premium on Giant's stock is %. (Round to one decimal place.) (Round to the nearest cent.) b. Using the constant-growth model, the value of Giant's stock is $ c. Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock. (Select from the drop-down…arrow_forward
- Bond valuation-Semiannual interest Find the value of a bond maturing in 4 years, with a $1,000 par value and a coupon interest rate of 9% (4.5% paid semiannually) if the required return on similar-risk bonds is 13% annual interest. The present value of the bond is $ (Round to the nearest cent.)arrow_forwardYield to maturity The relationship between a bond's yield to maturity and coupon interest rate can be used to predict its pricing level. For the bond listed below, state whether the price of the bond will be at a premium to par, at par, or at a discount to par. Coupon interest rate 6% Yield to maturity 11% What is the price of the bond in relation to its par value? (Select the best answer below.) ○ A. The bond sells at a discount to par. B. The bond sells at a premium to par. OC. The bond sells at par.arrow_forwardBook value Find the book value for the asset shown in the accompanying table, assuming that MACRS depreciation is being used Elapsed time Recovery Asset A Installed cost $903,000 period (years) 5 since purchase (years) 4 The remaining book value is $ (Round to the nearest dollar.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education
Financial Accounting - Long-term Liabilities - Bonds; Author: Finance & Accounting Videos by Prof Coram;https://www.youtube.com/watch?v=_1fwsJIGMos;License: Standard Youtube License