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I need help answering these questions for my FIN 530 class. In mid-2010 a pound of apples cost $1.32, while oranges cost $1.16. Ten years
I need help answering these questions for my FIN 530 class.
In mid-2010 a pound of apples cost $1.32, while oranges cost $1.16. Ten years earlier the price of apples was only $.95 a pound and that of oranges was $.73 a pound. a. What was the annual compound rate of growth in the price of the two fruits? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Annual Compound rate growth for apples Compound rate growth for oranges % % b. If the same rates of growth persist in the future, what will be the price of apples in 2030? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of apples in 2030 $ c. What about the price of oranges? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of oranges in 2030 $ Investments in the stock market have increased at an average compound rate of about 5% since 1916. It is now 2012. a. If you invested $1,000 in the stock market in 1916, how much would that investment be worth today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) $108,186.40 Investment $ b. If your investment in 1916 has grown to $1 million, how much did you invest in 1916? (Do not round intermediate calculations. Round your answer to 2 decimal places.) $ 9,243.31 Present value $ A bond has 10 years until maturity, a coupon rate of 5.2%, and sells for $1,105. a. What is the current yield on the bond? (Round your answer to 2 decimal places.) Current yield % b. What is the yield to maturity? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to maturity % Refer the table below: Maturity 2012 May 15 2013 May 15 2014 May 15 2020 May 15 2025 Aug 15 2030 May 15 2040 May 15 Coupon 1.375 3.625 4.75 8.75 6.875 6.25 4.375 Bid Price 101:05 106:31 111:22 144:17 133:07 128:25 100:28 Asked Price 101:06 107:01 111:23 144:19 133:11 128:27 100:29 Asked Yield, % 0.78 1.23 1.70 3.44 3.94 4.12 4.32 What is the current yield of the 4.75% 2014 maturity bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) You expect a share of stock to pay dividends of $1.80, $2.05, and $2.20 in each of the next 3 years. You believe the stock will sell for $24 at the end of the third year. a. What is the stock price if the discount rate for the stock is 20%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 18.09 b. What is the dividend yield? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 18.09 The following are the cash flows of two projects: Year 0 1 2 3 Project A $360 190 190 190 Project B $360 260 260 260 4 190 a. If the opportunity cost of capital is 12%, calculate NPV for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Project A B NPV $ b. Which of these projects is worth pursuing? Project A Project B Both The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $320 150 150 150 150 Project B $320 220 220 220 What is the payback period of each project? (Round your answers to 2 decimal places.) Project A .B Payback Period years years A precision lathe costs $12,000 and will cost $22,000 a year to operate and maintain. If the discount rate is 14% and the lathe will last for 4 years, what is the equivalent annual cost of the tool? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Equivalent annual cost $ The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $320 150 150 150 150 Project B $320 220 220 220 What is the payback period of each project? (Round your answers to 2 decimal places.) Project A B Payback Period years years A house painting business had revenues of $16,100 and expenses of $9,100. There were no depreciation expenses. However, the business reported the following changes in working capital: Accounts receivable Accounts payable Beginning $1,300 720 End $4,600 310 Calculate net cash flow for the business for this period. Net cash flow $ The owner of a bicycle repair shop forecasts revenues of $216,000 a year. Variable costs will be $64,000, and rental costs for the shop are $44,000 a year. Depreciation on the repair tools will be $24,000. The tax rate is 30%. a. Calculate operating cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach. Method Adjusted accounting profits Cash inflow/cash outflow analysis Depreciation tax shield approach Operating Cash Flow $ b. Are the above answers equal? Yes No The owner of a bicycle repair shop forecasts revenues of $176,000 a year. Variable costs will be $54,000, and rental costs for the shop are $34,000 a year. Depreciation on the repair tools will be $14,000. Prepare an income statement for the shop based on these estimates. The tax rate is 40%. (Input all amounts as positive values.) INCOME STATEMENT $ $ A new project will generate sales of $74.6 million, costs of $42.6 million, and depreciation expense of $10.6 million in the coming year. The firm's tax rate is 35%. a. Calculate cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach. (Enter your answers in millions rounded to 2 decimal places.) Method Adjusted accounting profits Cash inflow/cash outflow analysis Depreciation tax shield approach Cash Flow $ million million million b. Are the above answers equal? Yes No Canyon Tours showed the following components of working capital last year: Accounts receivable Inventory Accounts payable Beginning $25,200 12,600 15,100 End of Year $23,600 13,700 17,700 a. What was the change in net working capital during the year? (Negative amount should be indicated by a minus sign.) Change in net working capital $ b. If sales were $36,600 and costs were $24,600, what was cash flow for the year? Ignore taxes. Cash flow $ A silver mine can yield 12,000 ounces of silver at a variable cost of $30 per ounce. The fixed costs of operating the mine are $54,000 per year. In half the years, silver can be sold for $46 per ounce; in the other years, silver can be sold for only $23 per ounce. Ignore taxes. a. What is the average cash flow you will receive from the mine if it is always kept in operation and the silver always is sold in the year it is mined? Average cash flow $ b. Now suppose you can shut down the mine in years of low silver prices. Calculate the average cash flow from the mine. Average cash flow $ In a slow year, Deutsche Burgers will produce 2.9 million hamburgers at a total cost of $4.3 million. In a good year, it can produce 4.9 million hamburgers at a total cost of $5.5 million. What are the variable and fixed costs of hamburger production? (Enter your answers in dollars not in millions. Round "Variable cost" to 2 decimal places.) Variable cost Fixed cost $ per burger $ Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed costs are $1,900 per year and variable costs are $60 per unit. a. If the project requires an initial investment of $2,000 and is expected to last for 5 years and the firm pays no taxes. The initial investment will be depreciated straight-line over 5 years to a final value of zero, and the discount rate is 10%. What are the accounting and NPV break-even levels of sales? (Do not round intermediate calculations. Round your answers to the nearest whole number.) Accounting break-even levels of sales NPV break-even levels of sales units units b. What will be the accounting and NPV break-even levels of sales, if the firm's tax rate is 30%? (Do not round intermediate calculations. Round your answers to the nearest whole number.) Accounting break-even levels of sales NPV break-even levels of sales units unitsStep by Step Solution
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