Finc 5000 Homework Assignment for Week 6:

In: Business and Management

Submitted By Laynebaril
Words 399
Pages 2
FINC 5000 Homework Assignment for Week 6:
Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-6/ For Week 6, please turn in the answers to the following questions:

1. List the three steps that make up the general approach to capital budgeting.
2. Define an “Incremental cash flow” as the term is used in capital budgeting
3. Define the payback period method in capital budgeting and state the payback period decision rule.
4. What is the payback period of the following project?

Initial Investment: $60,000
Projected life: 7 years
Net cash flows each year: $14,000

5. Define the discounted payback period method in capital budgeting and state the payback period decision rule.
6. What is the discounted payback period of the project in Question 4, assuming your cost of capital is 7%?

7. Define the Net present Value (NPV) method in capital budgeting and state the NPV decision rule. In economic terms, what does the NPV amount represent?
8. Your firm is looking at a new investment opportunity, Project Z, with net cash flows as follows:

---- Net Cash Flows ---- Project Z

Initial Cost at T-0 (Now) ($100,000) cash inflow at the end of year 1 50,000 cash inflow at the end of year 2 40,000 cash inflow at the end of year 3 30,000

Calculate project Z's Net Present Value (NPV), assuming your firm’s required rate of return is 8%.
9. What is a “profitability index” (PI) as the term is used in capital budgeting?
10. What is the Profitability Index of project Z in question 8?
11. Consider Project Z and another Project, Project N, with net cash flows as follows:
a. Construct NPV Profiles for these two projects. Are we to assume it’s still at 8%?

b. If the two projects were mutually exclusive, which would you…...

Similar Documents

Fin 515 Week 6 Homework Assignment

...FIN 515 WEEK 6 HOMEWORK ASSIGNMENT To purchase this visit following link: http://www.activitymode.com/product/fin-515-week-6-homework-assignment/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 515 WEEK 6 HOMEWORK ASSIGNMENT FIN 515 Week 6 Homework Assignment Complete the following graded homework assignment in a Word document named “FIN515_Homework6_yourname“. Show the details of your calculation/work in your answer to the Problems. • Problems (p. 503) o 12-1 AFN Equation • Problems (pp. 549-550) o 13-2 Value of Operations of Constant Growth Firm o 13-3 Horizon Value o 13-4 EROIC and MVA of Constant Growth Firm Activity mode aims to provide quality study notes and tutorials to the students of FIN 515 Week 6 Homework Assignment in order to ace their studies. FIN 515 WEEK 6 HOMEWORK ASSIGNMENT To purchase this visit following link: http://www.activitymode.com/product/fin-515-week-6-homework-assignment/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 515 WEEK 6 HOMEWORK ASSIGNMENT FIN 515 Week 6 Homework Assignment Complete the following graded homework assignment in a Word document named “FIN515_Homework6_yourname“. Show the details of your calculation/work in your answer to the Problems. • Problems (p. 503) o 12-1 AFN Equation • Problems (pp. 549-550) o 13-2 Value of Operations of Constant Growth Firm o 13-3 Horizon Value o 13-4 EROIC and MVA of Constant Growth Firm Activity mode aims to provide quality study notes and tutorials to the students of FIN...

Words: 513 - Pages: 3

Mat 510 Week 7 Homework Assignment 6

...MAT 510 WEEK 7 HOMEWORK ASSIGNMENT 6 To purchase this visit following link: http://www.activitymode.com/product/mat-510-week-7-homework-assignment-6/ Contact us at: SUPPORT@ACTIVITYMODE.COM MAT 510 WEEK 7 HOMEWORK ASSIGNMENT 6 MAT510 Week 7 Homework Assignment 6 Strayer Due in Week 7 and worth 30 points The data in the table below is from a study conducted by an insurance company to determine the effect of changing the process by which insurance claims are approved. The goal was to improve policyholder satisfaction by speeding up the process and eliminating some non-value-added approval steps in the process. The response measured was the average time required to approve and mail all claims initiated in a week. The new procedure was tested for 12 weeks, and the results were compared to the process performance for the 12 weeks prior to instituting the change. Table: Insurance Claim Approval Times (days) Old Process New Process Week Elapsed Time Week Elapsed Time 1 31.7 13 24 2 27 14 25.8 3 33.8 15 31 4 30 16 23.5 5 32.5 17 28.5 6 33.5 18 25.6 7 38.2 19 28.7 8 37.5 20 27.4 9 29 21 28.5 10 31.3 22 25.2 11 38.6 23 24.5 12 39.3 24 23.5 Use the date in table above and answer the following questions in the space provided below: 1. What was the average effect of the process change? Did the process average increase or decrease and by how much? 2. Analyze the data using the regression model y = b0 + b1x, where y = time to approve and mail...

Words: 1132 - Pages: 5

Mat 510 Week 6 Homework Assignment 5

...MAT 510 WEEK 6 HOMEWORK ASSIGNMENT 5 To purchase this visit following link: http://www.activitymode.com/product/mat-510-week-6-homework-assignment-5/ Contact us at: SUPPORT@ACTIVITYMODE.COM MAT 510 WEEK 6 HOMEWORK ASSIGNMENT 5 MAT510 Homework Assignment 5 Strayer Due in Week 6 and worth 30 points The data in below table lists country code and the order to remittance (OTR) time for hardware / software installations for the last 76 installations (from first to last). OTR is the time it takes from an order being placed until the system is installed and we receive payment (remittance). Because this company does business internationally, it also notes the country of installation using a country code. This code is listed in the first column. Table: Country Code and OTR Cycle Time for Software Systems Installation Country Code Cycle Time Country Code Cycle Time 1 20 5 29 1 24 6 40 1 46 7 157 1 26 8 19 14 38 5 24 1 15 1 81 1 15 7 53 17 23 7 26 1 31 1 28 1 31 1 34 6 64 1 34 5 29 7 50 5 44 1 52 1 32 1 19 1 15 1 44 7 11 14 150 7 14 7 29 1 89 17 23 17 41 6 79 7 41 17 13 1 36 6 32 8 43 7 61 17 21 8 42 8 28 8 46 7 18 7 88 8 47 14 24 6 26 7 7 6 47 1 33 5 9 5 129 7 42 17 41 5 5 17 43 6 27 14 42 6 27 14 42 1 33 7 53 7 44 7 53 1 21 7 48 1 22 5 21 1 50 1 19 Use the date in table above and answer the following questions in the space provided below: 1. Does the OTR time appear to be stable? Why or why not? 2. If you were to use a control chart......

Words: 1198 - Pages: 5

Finc 5000 Week 5 Homework Assignment

...FINC 5000 Week 5 Homework Assignment Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-week-5-homework/ Chapter 9: For Week 5, please turn in the answers to the following questions: 1. What does it mean when people refer to a firm’s “cost of capital?” 2. What are the three components that normally make up a firm’s weighted average cost of capital (WACC)? 3. (calculating the after-tax cost of debt) Suppose your firm can borrow what it needs from a local bank at 4.5% interest. If your firm’s effective tax rate is 40%, what is its after-tax cost of debt? 4. (calculating the cost of preferred stock) Suppose your firm wants to finance a project, in part, with 4.0%, $100 par preferred stock which the firm’s investment bankers say can be sold for $60 a share. The investment bankers will charge your firm $1 a share to handle the stock issue. Given these conditions, what is your firm’s cost of preferred stock? 5. (calculating the cost of common stock, or common equity per the dividend growth model approach) Your firm’s common stock is selling for $37.00 a share and it paid a dividend last year to the common stockholders of $1.60. If the growth rate in earnings and dividends for your firm is estimated to be a constant 5% for the foreseeable future, what is your firm’s cost of common equity per the dividend growth model approach? 6. (cost of common stock, or common equity per the CAPM approach) After some research on the Internet, you...

Words: 414 - Pages: 2

Finc 5000 Homework Assignment for Week 6:

...FINC 5000 Homework Assignment for Week 6: Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-6/ For Week 6, please turn in the answers to the following questions: 1. List the three steps that make up the general approach to capital budgeting. 2. Define an “Incremental cash flow” as the term is used in capital budgeting 3. Define the payback period method in capital budgeting and state the payback period decision rule. 4. What is the payback period of the following project? Initial Investment: $60,000 Projected life: 7 years Net cash flows each year: $14,000 5. Define the discounted payback period method in capital budgeting and state the payback period decision rule. 6. What is the discounted payback period of the project in Question 4, assuming your cost of capital is 7%? 7. Define the Net present Value (NPV) method in capital budgeting and state the NPV decision rule. In economic terms, what does the NPV amount represent? 8. Your firm is looking at a new investment opportunity, Project Z, with net cash flows as follows: ---- Net Cash Flows ---- Project Z Initial Cost at T-0 (Now) ($100,000) cash inflow at the end of year 1 50,000 cash inflow at the end of year 2 40,000 cash inflow at the end of year 3 30,000 Calculate project Z's Net Present Value (NPV), assuming your firm’s required rate of return...

Words: 399 - Pages: 2

Finc 500 Homework Assignment for Week 7:

...FINC 500 Homework Assignment for Week 7: Click Link Below To Buy: http://hwcampus.com/shop/finc-500-homework-assignment-for-week-7/ For Week 7, please turn in the answers to the following questions: 1. When analysts use the term “capital structure,” what are they referring to? 2. Why does capital structure affect the market value of a firm? 3. Define “total risk” as it is used in capital structure theory. How is total risk measured? 4. The forecast for your firm indicates there's a 20% chance that Net Income will be $200,000, a 50% chance it will be $300,000, and a 30% chance it will be $400,000. a. Given these conditions and your answer to part a, what is the standard deviation of the Net Income estimate? b. Given your answers to parts a & b, what is the coefficient of variation (CV) of the net income estimate? 5. What’s the difference between business risk and financial risk? 6. Assume your firm is zero-growth and pays all its net income in dividends each year Also assume your firm can borrow money when it needs to at an interest rate of 6%. Currently your firm’s cost of equity (Rs) is 10%, but if any money is borrowed that cost will rise to 11%. Sales this year are expected to be $500,000 and operating costs are expected to be $400,000. Your firm’s effective tax rate is 40%. Given these conditions, what is the current value of your firm? What will be the new value of your firm if it takes on $250,000 in debt?...

Words: 271 - Pages: 2

Fin 515 Week 6 Homework Assignment

...FIN 515 Week 6 Homework Assignment Purchase here http://devrycourse.com/fin-515-week-6-homework-assignment Product Description Complete the following graded homework assignment in a Word document named “FIN515_Homework6_yourname". Show the details of your calculation/work in your answer to the Problems. • Problems (p. 503) o 12-1 AFN Equation • Problems (pp. 549-550) o 13-2 Value of Operations of Constant Growth Firm o 13-3 Horizon Value o 13-4 EROIC and MVA of Constant Growth Firm FIN 515 Week 6 Homework Assignment Purchase here http://devrycourse.com/fin-515-week-6-homework-assignment Product Description Complete the following graded homework assignment in a Word document named “FIN515_Homework6_yourname". Show the details of your calculation/work in your answer to the Problems. • Problems (p. 503) o 12-1 AFN Equation • Problems (pp. 549-550) o 13-2 Value of Operations of Constant Growth Firm o 13-3 Horizon Value o 13-4 EROIC and MVA of Constant Growth Firm FIN 515 Week 6 Homework Assignment Purchase here http://devrycourse.com/fin-515-week-6-homework-assignment Product Description Complete the following graded homework assignment in a Word document named “FIN515_Homework6_yourname". Show the details of your calculation/work in your answer to the Problems. • Problems (p. 503) o 12-1 AFN Equation • Problems (pp. 549-550) o 13-2 Value of Operations of Constant Growth Firm o 13-3 Horizon Value o 13-4 EROIC and MVA of......

Words: 880 - Pages: 4

Finc 5000 Week 5 Homework Assignment

...FINC 5000 Week 5 Homework Assignment Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-week-5-homework/ Chapter 9: For Week 5, please turn in the answers to the following questions: 1. What does it mean when people refer to a firm’s “cost of capital?” 2. What are the three components that normally make up a firm’s weighted average cost of capital (WACC)? 3. (calculating the after-tax cost of debt) Suppose your firm can borrow what it needs from a local bank at 4.5% interest. If your firm’s effective tax rate is 40%, what is its after-tax cost of debt? 4. (calculating the cost of preferred stock) Suppose your firm wants to finance a project, in part, with 4.0%, $100 par preferred stock which the firm’s investment bankers say can be sold for $60 a share. The investment bankers will charge your firm $1 a share to handle the stock issue. Given these conditions, what is your firm’s cost of preferred stock? 5. (calculating the cost of common stock, or common equity per the dividend growth model approach) Your firm’s common stock is selling for $37.00 a share and it paid a dividend last year to the common stockholders of $1.60. If the growth rate in earnings and dividends for your firm is estimated to be a constant 5% for the foreseeable future, what is your firm’s cost of common equity per the dividend growth model approach? 6. (cost of common stock, or common equity per the CAPM approach) After some research on the Internet, you...

Words: 414 - Pages: 2

Finc 500 Homework Assignment for Week 7:

...FINC 500 Homework Assignment for Week 7: Click Link Below To Buy: http://hwcampus.com/shop/finc-500-homework-assignment-for-week-7/ For Week 7, please turn in the answers to the following questions: 1. When analysts use the term “capital structure,” what are they referring to? 2. Why does capital structure affect the market value of a firm? 3. Define “total risk” as it is used in capital structure theory. How is total risk measured? 4. The forecast for your firm indicates there's a 20% chance that Net Income will be $200,000, a 50% chance it will be $300,000, and a 30% chance it will be $400,000. a. Given these conditions and your answer to part a, what is the standard deviation of the Net Income estimate? b. Given your answers to parts a & b, what is the coefficient of variation (CV) of the net income estimate? 5. What’s the difference between business risk and financial risk? 6. Assume your firm is zero-growth and pays all its net income in dividends each year Also assume your firm can borrow money when it needs to at an interest rate of 6%. Currently your firm’s cost of equity (Rs) is 10%, but if any money is borrowed that cost will rise to 11%. Sales this year are expected to be $500,000 and operating costs are expected to be $400,000. Your firm’s effective tax rate is 40%. Given these conditions, what is the current value of your firm? What will be the new value of your firm if it takes on $250,000 in debt?...

Words: 271 - Pages: 2

Finc 5000 Homework Assignment for Week 1

...FINC 5000 Homework Assignment for Week 1 Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-1/ For Week 1, please turn in the answers to the following questions: Chapter 1: 1. Describe the field of finance. How is it different from the field of accounting? 2. What are the three forms of business generally encountered in the US? What are the main defining characteristics of each? 3. What should be the basic financial goal of a business? 4. In the context of a corporation seeking to maximize the wealth of its owners, how is “wealth” defined? 5. What are the three broad factors that influence the market price of a corporation’s stock? 6. Name three ways in which businesses can raise money from external sources when they need it for expansion or project funding. Chapter 2: 7. What is the purpose of a balance sheet? What are some examples of typical balance sheet accounts? 8. What is the purpose of an income statement? What are some examples of typical income statement accounts? 9. What is the purpose of a statement of cash flows? What are some examples of typical statement of cash flow accounts? 10. a. What are “Free Cash Flows (FCF)?” b. What is “NOPAT?” 11. What was Joe’s average, or effective tax rate in 2014? 12. What was Joe’s NOPAT in 2014? 13. What was Joe’s Free Cash Flow (FCF) in 2014? (Note: For......

Words: 442 - Pages: 2

Finc 5000 Homework Assignment for Week 2:

...FINC 5000 Homework Assignment for Week 2: Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-2/ 1-What is it necessary to know about itme value of money of money consptes?why can’t you just make about future cash flows based purely on the size of the cash flow? 2-Define future value 3-Define present value 4.What are annuities? 5. (calculating future value) You buy an 7 year, 8% CD for $1,000. Interest is compounded annually. How much is it worth at maturity? 6. (calculating present value) What's the present value of $10,000 to be received in 5 years? (Your required rate of return is 8% a year.) 7. (calculating the rate of return) A friend promises to pay you $600 three years from now if you loan her $500 today. What interest rate is your friend offering you? 8. (calculating the future value of an annuity) If you invest $100 a year for 20 years at 5% annual interest, how much will you have at the end of the 20th year? 9. (calculating the present value of an annuity) How much would you be willing to pay today for an investment that pays $700 a year at the end of the next 5 years? (Your required rate of return is 8% a year.) 10. (Rate of return of an annuity) You would like to have $1,000,000 40 years from now, but the most you can afford to invest each year is $1,200. What annual rate of return will you have to earn to reach your goal? 11. (Monthly compounding) If you bought a $1,000 face value CD that......

Words: 588 - Pages: 3

Finc 5000 Homework Assignment for Week 3:B

...FINC 5000 Homework Assignment for Week 3: Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-3/ Chapter 5: For Week 3, please turn in the answers to the following questions: 1. Define the following terms as they apply to bonds: a. Face value b. Maturity date c. Coupon interest (including coupon interest rate) d. Current yield e. Yield to maturity (YTM) f. Yield to call (YTC) g. Call premium 2. What are “Zero-coupon” bonds? 3. Suppose you see the following bond price quote in the newspaper: McDonalds 5.7% 2039……..122.733 What can you tell about this bond from reading the price quote? 4. (calculating the present value of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a yield to maturity (YTM) of 4.201%, what should be its price in the bond market (ie, PV)? 5. (calculating the current yield of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a market price of $1,223.92, what is its current yield? 6. (calculating the YTM of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a market price of $1,223.92, what is its yield to maturity (YTM)? 7. (calculating the YTC of a bond) Assume a callable corporate bond with a face value of $1,000, a coupon interest rate of 5.7%, a......

Words: 657 - Pages: 3

Finc 5000 Homework Assignment for Week 1

...FINC 5000 Homework Assignment for Week 1 Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-1/ For Week 1, please turn in the answers to the following questions: Chapter 1: 1. Describe the field of finance. How is it different from the field of accounting? 2. What are the three forms of business generally encountered in the US? What are the main defining characteristics of each? 3. What should be the basic financial goal of a business? 4. In the context of a corporation seeking to maximize the wealth of its owners, how is “wealth” defined? 5. What are the three broad factors that influence the market price of a corporation’s stock? 6. Name three ways in which businesses can raise money from external sources when they need it for expansion or project funding. Chapter 2: 7. What is the purpose of a balance sheet? What are some examples of typical balance sheet accounts? 8. What is the purpose of an income statement? What are some examples of typical income statement accounts? 9. What is the purpose of a statement of cash flows? What are some examples of typical statement of cash flow accounts? 10. a. What are “Free Cash Flows (FCF)?” b. What is “NOPAT?” 11. What was Joe’s average, or effective tax rate in 2014? 12. What was Joe’s NOPAT in 2014? 13. What was Joe’s Free Cash Flow (FCF) in 2014? (Note: For......

Words: 442 - Pages: 2

Finc 5000 Homework Assignment for Week 2:

...FINC 5000 Homework Assignment for Week 2: Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-2/ 1-What is it necessary to know about itme value of money of money consptes?why can’t you just make about future cash flows based purely on the size of the cash flow? 2-Define future value 3-Define present value 4.What are annuities? 5. (calculating future value) You buy an 7 year, 8% CD for $1,000. Interest is compounded annually. How much is it worth at maturity? 6. (calculating present value) What's the present value of $10,000 to be received in 5 years? (Your required rate of return is 8% a year.) 7. (calculating the rate of return) A friend promises to pay you $600 three years from now if you loan her $500 today. What interest rate is your friend offering you? 8. (calculating the future value of an annuity) If you invest $100 a year for 20 years at 5% annual interest, how much will you have at the end of the 20th year? 9. (calculating the present value of an annuity) How much would you be willing to pay today for an investment that pays $700 a year at the end of the next 5 years? (Your required rate of return is 8% a year.) 10. (Rate of return of an annuity) You would like to have $1,000,000 40 years from now, but the most you can afford to invest each year is $1,200. What annual rate of return will you have to earn to reach your goal? 11. (Monthly compounding) If you bought a $1,000 face value CD that......

Words: 588 - Pages: 3

Finc 5000 Homework Assignment for Week 3:

...FINC 5000 Homework Assignment for Week 3: Click Link Below To Buy: http://hwcampus.com/shop/finc-5000-homework-assignment-for-week-3/ Chapter 5: For Week 3, please turn in the answers to the following questions: 1. Define the following terms as they apply to bonds: a. Face value b. Maturity date c. Coupon interest (including coupon interest rate) d. Current yield e. Yield to maturity (YTM) f. Yield to call (YTC) g. Call premium 2. What are “Zero-coupon” bonds? 3. Suppose you see the following bond price quote in the newspaper: McDonalds 5.7% 2039……..122.733 What can you tell about this bond from reading the price quote? 4. (calculating the present value of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a yield to maturity (YTM) of 4.201%, what should be its price in the bond market (ie, PV)? 5. (calculating the current yield of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a market price of $1,223.92, what is its current yield? 6. (calculating the YTM of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a market price of $1,223.92, what is its yield to maturity (YTM)? 7. (calculating the YTC of a bond) Assume a callable corporate bond with a face value of $1,000, a coupon interest rate of 5.7%, a......

Words: 657 - Pages: 3