Tory invested $600 a year for three years, then $700 a year for an additional fo 9, she withdrew $1,500. She withdrew the entire investment in year 11. Which s correctly applies to the time line for this problem? Multiple choice question. The withdrawal in year 11 is a negative cash flow. The timeline has a total of nine time periods. The cash flow in year 4 is a negative $600. The cash flows for the first seven years are negative.
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- Fatuma invests a total of $10,000 in two accounts. The first account earned a rate of return of 11% (after a year). However, the second account suffered a 2% loss in the same time period. At the end of one year, the total amount of money gained was $645.00. How much was invested into each account? was invested in the account that gained 11% and $4 was invested in the account that lost 2%.Fill in the blank to answer the below. You invested $20,000 at the beginning of the year. At the end of the year, you received cash flows of $400 from the investment and you cashed out entirely, receiving $21,600. What is your return for the year? %A financial engineer designs a new financial instrument that she calls the SafetyNet. This instrument gives the holder access to the following cashflows: • For the first 4 years, the holder receives $95 per year starting one year from today (a total of 4 payments). • The holder does not receive any cashflows for year 5. • Starting at the end of year 6, the holder receives $60 growing at a rate of 4% per year forever. • The holder has to pay a “service fee” of $7 every year starting at the end of year 2; this goes on forever. The prevailing discount rate throughout is 6%. The financial engineer would like to determine a fair market price for this financial instrument. What do you suggest this price to be? Please show your work.
- PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULAS5.- Calculate the interest rate applied. Strange things happen to Rodrigo Salguero. Now in the recent rains, he left his car window open and the receipt for the investment he had just made got wet. But you can help him. What is the simple annual interest rate earned by that bank investment in which Rodrigo invested $386,500 and obtained $560,425 at the end of four years, without capitalization of interest (i.e., at simple interest)? Note:In the image, this is the original exercise, it is in Spanish, but it is easy to understand. Very important Note:It is necessary that you make a solution approach and then the result. Above all, to check the procedure and/or the formulas used, especially when you use excel. TO CONSIDER THE YEAR AS 360 DAYS (WHICH IS COMMERCIAL)8. Unevencash flows A series, or stream, of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and nonconstant, but the concept of the time value of money applies to uneven cash flows as well. Consider the following case: Swanky Beverage Co. expects the following cash flows from its manufacturing plant in Palau over the next 6 years: Year Annual Cash Flows 1 $1,200,000 2 $3,650,000 $5,750,000 $4,400,000 $3,800,000 $4,500,000 3 4 5 6Melisandre deposits $508.76 in a bank account paying i(12) = 1.500%. 8 months later, she withdraws $335.78. How much money does she have in her bank account exactly 1 year after opening it? (No dates or daycount convention are given, so use theoretical time; i.e. 1 year = 365 days = 52 weeks = 12 months etc. and count time in periods. e.g. 3 weeks = 3/52 years; 3 months = 0.25 years, etc.) a. $182.56 b. $191.51 c. $196.88 d. $186.14 e. $178.98
- Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Michael Kimathi has purchased a tractor for $87,500. He expects to receive a net cash flow of $33,000 per year from the investment. What is the payback period for Michael? Round your answer to two decimal places. 2.65 years 2. Bertha Lafferty invested $362,500 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $109,000 per year. What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box). 30 X % 3. Melannie Bayless has purchased a business building for $322,000. She expects to receive the following cash flows over a 10-year period: Year 1: $44,500 Year 2: $62,000 Year 3-10: $81,400 What is the payback period for Melannie? Round your answer to one decimal place. 4.6 years What is the accounting rate of return?…ABC Corporation is testing the impairment of a cash generating unit that includes the accounts as shown in the image. The inventories can be sold for a net amount of P400,000 while the receivables can be realized at carrying amount. The expected cash flows from the unit is P1,200,000 for the first five years and P600,000 for the last five years. ABC deems it appropriate to have a discount rate of 8%. What is the net carrying value of the equipment after impairment? Inventory 300,000 Accounts Receivable, net 500,000 Equipment, net 7,000,000 Patent, net 1,700,000 Account Payable 800,000 Goodwill 100,000From Part A above, assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for the 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 1 4 2 5 3 6 4 7.33 5 8 6 8.25 Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume discount rate 17% This project does not end after the sixth year but instead will generate cash flows far into the future. Estimate the project’s terminal value, assuming that cash flows after year 6 continue at $8.25 per year perpetuity and then recalculate the investment’s NPV. Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV.
- A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $114,000 and will generate $45,000 in net cash flows for five years. Note: Negative cumulative cash flows should be indicated with a minus sign. Round break-even time answers to two decimal places. Determine the break-even time for this equipment. Year Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow x $ (114,000) x 45,000 x 45,000 x 45,000 x 45,000 x 45,000 x Present Value of 1 at 10% 1.0000 0.9091 0.8264 = 0.7513 = 0.6830 = 0.6209 = Present Value of Net Cash Flows $ (114,000) $ Cumulative Present Value of Net Cash Flows (114,000)From Part A above, assume that the bank decided to give a loan of $ 59 million to Zenith Corporation (recorded for initial year). Zenith-Corporation invested the amount in a project and generated the following sequence of cash flows over six years: Year Cash Flow ($ million) 0 -59 1 4 2 5 3 6 4 7.33 5 8 6 8.25 Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume discount rate 13% This project does not end after the sixth year but instead will generate cash flows far into the future. Estimate the project’s terminal value, assuming that cash flows after year 6 continue at $8.25 per year perpetuity and then recalculate the investment’s NPV. Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV.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 1 4 2 5 3 6 4 7.33 5 8 6 8.25 Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume interesr rate is 13% This project does not end after the sixth year but instead will generate cash flows far into the future. Estimate the project’s terminal value, assuming that cash flows after year 6 continue at $8.25 per year perpetuity and then recalculate the investment’s NPV. Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV.