Finance

You purchased an asset exactly one year ago for $75,000. You have been depreciating it under the MACRS three-year schedule (assume these depreciation percentages: Yr 1: 33.3%, Yr 2: 44.5%, Yr 3: 14.8%, and Yr 4: 7.4%). You have an offer to sell this asset for $65,000. Your tax bracket is 30%. What will be your cash flow after taxes?

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EXPERT ANSWER Book value as on date of sale=cost-Accumulated depreciation =$75000*(1-0.333)=$50,025 Hence gain on sale=(65000-50025)=$14975 Hence cash flow=Sale proceeds-(gain on sale*Tax rate) =65000-(14975*30%) =$60,507.50

A Moving to another question will save this response. Question 9 of 11 estion 9 10 points Save Answe The World Income appreciation fund currently trades for a market price of $21.89. The fund has assets worth $8.5 billion and 400 million shares outstanding. Does the fund have any front-load, if yes how much? 5.29% GA OB. 3.01% No front-load c. OD 4.29% Moving to another question will save this response. Question 9 of 11 tv X W

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EXPERT ANSWER NAV = Assets / shares NAV = 8,500,000,000 / 400,000,000 NAV = 21.25 Offering price = NAV(1 – front load) 21.89 = 21.25(1 – front load) 1.0301 = 1 – front load Front load = 0.0301 or 3.01%

S18-06 Calculating Cycles [LO1] Consider the following financial statement information for the Newk Corporation Beginning Ending Item Inventory Accounts $ 11,718 5,860 7,930 $14,865 6,127 8,930 receivable Accounts payable $127,382 76157 Credit sales Cost of goods sold Calculate the operating and cash cycles,. (Use 365 days a year. Do not rounc intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) days days Operating cycle Cash cycle

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EXPERT ANSWER Average Inventory = (Beginning Inventory + Ending Inventory) / 2Average Inventory = ($11,718 + $14,865) / 2Average Inventory = $13,291.50 Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2Average Accounts Receivable = ($5,860 + $6,127) / 2Average Accounts Receivable = $5,993.50 Average Accounts Payable = (Beginning Accounts Payable + …

S18-06 Calculating Cycles [LO1] Consider the following financial statement information for the Newk Corporation Beginning Ending Item Inventory Accounts $ 11,718 5,860 7,930 $14,865 6,127 8,930 receivable Accounts payable $127,382 76157 Credit sales Cost of goods sold Calculate the operating and cash cycles,. (Use 365 days a year. Do not rounc intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) days days Operating cycle Cash cycle Read More »

4. Other friends hear about this and decide they want to do the same for their daughter. They were also able to establish a college fund that earns 8% compounded annually. The made the first payment on her 5th birthday. They can pay R7000 each year. However, for various reasons they could only contribute R3000 on her 10th birthday. They paid R7000 again from her 11th birthday to her 15th birthday.

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EXPERT ANSWER Solution: No. of total payment=12 Future value is calculated as follow: =Payment*(1+interest rate)^no. of years =7000*(1+0.08)^12+7000*(1+0.08)^11+7000*(1+0.08)^10+7000*(1+0.08)^09+7000*(1+0.08)^08+3000*(1+0.08)^7+7000*FVAF(8%,5) =7000*2.5182+7000*2.3316+7000*2.1589+7000*1.9990+7000*1.8509+7000*1.7138+3000*1.5869+7000*5.8666 =R133,833.70

Hospitals measure their volume in terms of patient-days. We can calculate patient-days by multiplying the number of patients by the number of days that the patients are hospitalized. suppose a large hospital has fixed costs of 54 million per year and variable costs of $ 600 per patient-day. Daily revenues vary among classes of patients. For simplicity, assume that there are two classses: (1) self-pay patients (S) who pay an average of $ 1,000 per day and (2) non-self pay patients (G) who are the responsability of insurance companies and government agencies and who pay an average of $ 800 per day. twenty percent of patients are self pay.

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Hospitals Measure Their Volume In Terms Of Patient-Days. We Can Calculate Patient-Days By Multiplying The Number Of Patients By The Number Of Days That The Patients Are Hospitalized. Suppose A Large Hospital Has Fixed Costs Of 54 Million Per Year And Variable Costs Of $ 600 Per Patient-Day. Daily Revenues Vary Among Classes Of Patients. …

Hospitals measure their volume in terms of patient-days. We can calculate patient-days by multiplying the number of patients by the number of days that the patients are hospitalized. suppose a large hospital has fixed costs of 54 million per year and variable costs of $ 600 per patient-day. Daily revenues vary among classes of patients. For simplicity, assume that there are two classses: (1) self-pay patients (S) who pay an average of $ 1,000 per day and (2) non-self pay patients (G) who are the responsability of insurance companies and government agencies and who pay an average of $ 800 per day. twenty percent of patients are self pay. Read More »

deposits of $250 are made at the end of each quarter into an account that earns 9%. determine the amount in the account after one year if the focal date is one year hence.

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deposits of $250 are made at the end of each quarter into an account that earns 9%. determine the amount in the account after one year if the focal date is one year hence. EXPERT ANSWER PMT = 250 n = 4 r = 9%/4 = 0.0225 per quarter The amount in the account after …

deposits of $250 are made at the end of each quarter into an account that earns 9%. determine the amount in the account after one year if the focal date is one year hence. Read More »

Problem 3. Jorn Co is in need of approximately $2,000,000 to finance the purchasing of equipment and inventory for a business expansion. They are trying to decide between the three following scenarios: Option 1: Issuing $3,000,000 in 10-year bonds with an annual 4% coupon rate. Similar bonds have a 9% market rate. Option 2: Issuing $1,500,000 in 10-year bonds with an annual 13% coupon rate. Similar bonds have an 8% market rate. Option 3: Issuing a 10-year $5,000,000 zero-interest-bearing note with an implicit rate of 9.5%. Part A. For each scenario, prepare the amortization table for the first 2 full years. Part B. Besides the difference in market rates, what else should Jorn take into consideration when making their decision?
Problem 3. Jorn Co is in need of approximately $2,000,000 to finance the purchasing of equipment and inventory for a business expansion. They are trying to decide between the three following scenarios: Option 1: Issuing $3,000,000 in 10-year bonds with an annual 4% coupon rate. Similar bonds have a 9% market rate. Option 2: Issuing $1,500,000 in 10-year bonds with an annual 13% coupon rate. Similar bonds have an 8% market rate. Option 3: Issuing a 10-year $5,000,000 zero-interest-bearing note with an implicit rate of 9.5%. Part A. For each scenario, prepare the amortization table for the first 2 full years. Part B. Besides the difference in market rates, what else should Jorn take into consideration when making their decision?

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with an implicit rate of 9.5% EXPERT ANSWER orn Co is trying to decide between 3 scenarios to finance $ 2,000,000 for purchasing of equipment and inventory. Option 1 : Issuing $3,000,000 in 10- year bonds with annual coupon rate 4%. The market rate for similar bonds is 9%, so we will discount these bonds …

Problem 3. Jorn Co is in need of approximately $2,000,000 to finance the purchasing of equipment and inventory for a business expansion. They are trying to decide between the three following scenarios: Option 1: Issuing $3,000,000 in 10-year bonds with an annual 4% coupon rate. Similar bonds have a 9% market rate. Option 2: Issuing $1,500,000 in 10-year bonds with an annual 13% coupon rate. Similar bonds have an 8% market rate. Option 3: Issuing a 10-year $5,000,000 zero-interest-bearing note with an implicit rate of 9.5%. Part A. For each scenario, prepare the amortization table for the first 2 full years. Part B. Besides the difference in market rates, what else should Jorn take into consideration when making their decision?
Problem 3. Jorn Co is in need of approximately $2,000,000 to finance the purchasing of equipment and inventory for a business expansion. They are trying to decide between the three following scenarios: Option 1: Issuing $3,000,000 in 10-year bonds with an annual 4% coupon rate. Similar bonds have a 9% market rate. Option 2: Issuing $1,500,000 in 10-year bonds with an annual 13% coupon rate. Similar bonds have an 8% market rate. Option 3: Issuing a 10-year $5,000,000 zero-interest-bearing note with an implicit rate of 9.5%. Part A. For each scenario, prepare the amortization table for the first 2 full years. Part B. Besides the difference in market rates, what else should Jorn take into consideration when making their decision? Read More »