Question: Calculating Discounted Payback [LO3] An investment

> Assume it takes 7.00 minutes to fill a 30.0-gal gasoline tank. (a) Calculate the rate at which the tank is filled in gallons per second. (b) Calculate the rate at which the tank is filled in cubic meters per second. (c) Determine the time interval, in ho

> The displacement of an object moving under uniform acceleration is some function of time and the acceleration. Suppose we write this displacement as s = kamtn, where k is a dimensionless constant. Show by dimensional analysis that this expression is sati

> (a) Find a conversion factor to convert from miles per hour to kilometers per hour. (b) For a while, federal law mandated that the maximum highway speed would be 55 mi/h. Use the conversion factor from part (a) to find the speed in kilometers per hour. (

> A tennis player on serve tosses a ball straight up. While the ball is in free fall, does its acceleration (a) Increase (b) Decrease (c) Increase and then decrease (d) Decrease and then increase, or (e) Remain constant?

> A commuter airplane starts from an airport and takes the route shown in Figure P1.71. The plane first flies to city A, located 175 km away in a direction 30.0° north of east. Next, it flies for 150. km 20.0° west of north, to city B

> The helicopter view in Figure P1.70 shows two people pulling on a stubborn mule. Find (a) The single force that is equivalent to the two forces shown and (b) The force a third person would have to exert on the mule to make the net force equal to zero. Th

> The eye of a hurricane passes over Grand Bahama Island in a direction 60.0° north of west with a speed of 41.0 km/h. Three hours later the course of the hurricane suddenly shifts due north, and its speed slows to 25.0 km/h. How far from Grand Bahama is t

> A map suggests that Atlanta is 730. miles in a direction 5.00° north of east from Dallas. The same map shows that Chicago is 560. miles in a direction 21.0° west of north from Atlanta. Figure P1.68 shows the location of these three

> A vector has an x - component of -25.0 units and a y - component of 40.0 units. Find the magnitude and direction of the vector.

> A quarterback takes the ball from the line of scrimmage, runs backwards for 10.0 yards, and then runs sideways parallel to the line of scrimmage for 15.0 yards. At this point, he throws a 50.0-yard forward pass straight downfield, perpendicular to the li

> A girl delivering newspapers covers her route by traveling 3.00 blocks west, 4.00 blocks north, and then 6.00 blocks east. (a) What is her final position relative to her starting location? (b) What is the length of the path she walked?

> A figure skater glides along a circular path of radius 5.00 m. If she coasts around one half of the circle, find (a) Her distance from the starting location and (b) The length of the path she skated.

> The magnitude of vector A( is 35.0 units and points in the direction 325° counterclockwise from the positive x - axis. Calculate the x - and y - components of this vector.

> A person walks 25.0° north of east for 3.10 km. How far due north and how far due east would she have to walk to arrive at the same location?

> Figure 2.14a is a diagram of a multiflash image of an air puck moving to the right on a horizontal surface. The images sketched are separated by equal time intervals, and the first and last images show the puck at rest. (a) In Figure 2.14b, which color g

> A vector A( has components Ax = -5.00 m and Ay = 9.00 m. Find (a) The magnitude and (b) The direction of the vector.

> Calculate (a) the x - component and (b) the y - component of the vector with magnitude 24.0 m and direction 56.0°.

> A roller coaster moves 2.00 x 102 ft horizontally and then rises 135 ft at an angle of 30.0° above the horizontal. Next, it travels 135 ft at an angle of 40.0° below the horizontal. Use graphical techniques to find the roller coaster’s displacement from

> A force F(1 of magnitude 6.00 units acts on an object at the origin in a direction θ = 30.0° above the positive x - axis (Fig. P1.58). A second force F(2 of magnitude 5.00 units acts on the object in the direction of the positive

> Vector A( is 3.00 units in length and points along the positive x - axis. Vector B( is 4.00 units in length and points along the negative y - axis. Use graphical methods to find the magnitude and direction of the vectors (a) A( + B( and (b) A( - B(

> An airplane flies 2.00 x 102 km due west from city A to city B and then 3.00 x 102 km in the direction of 30.0° north of west from city B to city C. (a) In straight-line distance, how far is city C from city A? (b) Relative to city A, in what direction i

> Vector A( has a magnitude of 29 units and points in the positive y - direction. When vector B( is added to A(, the resultant vector A( + B( points in the negative y - direction with a magnitude of 14 units. Find the magnitude and direction of B(.

> Vector A( has a magnitude of 8.00 units and makes an angle of 45.0° with the positive x - axis. Vector B( also has a magnitude of 8.00 units and is directed along the negative x - axis. Using graphical methods, find (a) The vector sum A( + B( and (b) T

> A surveyor measures the distance across a straight river by the following method: starting directly across from a tree on the opposite bank, he walks x = 1.00 x 102 m along the riverbank to establish a baseline. Then he sights across to the tree. The ang

> A woman measures the angle of elevation of a mountaintop as 12.0°. After walking 1.00 km closer to the mountain on level ground, she finds the angle to be 14.0°. Find the mountain’s height, neglecting the height of the woman’s eyes above the ground. Dra

> The three graphs in Figure 2.13 represent the position vs. time for objects moving along the x - axis. Which, if any, of these graphs is not physically possible?

> In Problem 50, what is the tangent of the angle for which 5.00 m is the opposite side? Data from Problem 50: In a certain right triangle, the two sides that are perpendicular to each other are 5.00 m and 7.00 m long.

> In a certain right triangle, the two sides that are perpendicular to each other are 5.00 m and 7.00 m long. What is the length of the third side of the triangle?

> In Figure P1.49, find (a) The side opposite θ (b) The side adjacent to ϕ (c) cos θ (d) sin ϕ and (e) tan ϕ.

> A right triangle has a hypotenuse of length 3.00 m, and one of its angles is 30.0°. What are the lengths of (a) The side opposite the 30.0° angle (b) The side adjacent to the 30.0° angle

> A high fountain of water is located at the center of a circular pool as shown in Figure P1.47. Not wishing to get his feet wet, a student walks around the pool and measures its circumference to be 15.0 m. Next, the student stands at the edge of the pool

> A ladder 9.00 m long leans against the side of a building. If the ladder is inclined at an angle of 75.0° to the horizontal, what is the horizontal distance from the bottom of the ladder to the building?

> For the triangle shown in Figure P1.45, what are (a) The length of the unknown side, (b) The tangent of θ, and (c) The sine of ϕ?

> Given points (r1, θ 1) and (r2, θ 2) in polar coordinates, obtain a general formula for the distance between them. Simplify it as much as possible using the identity cos2 θ + sin2 θ = 1.

> Two points are given in polar coordinates by (r, θ) = (2.00 m, 50.0°) and (r, θ) = (5.00 m, -50.0°), respectively. What is the distance between them?

> Two points in a rectangular coordinate system have the coordinates (5.0, 3.0) and (23.0, 4.0), where the units are centimeters. Determine the distance between these points.

> Parts (a), (b), and (c) of Figure 2.10 represent three graphs of the velocities of different objects moving in straight - line paths as functions of time. The possible accelerations of each object as functions of time are shown in parts (d), (e), and (f)

> Your firm is contemplating the purchase of a new $535,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $165,000 before tax

> In the previous problem, suppose the fixed asset actually qualifies for 100 percent bonus depreciation in the first year. What is the new NPV? Problem 14: Dog Up! Franks is looking at a new sausage system with an installed cost of $385,000. This cost wi

> Dog Up! Franks is looking at a new sausage system with an installed cost of $385,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $60,000. The sausage s

> In the previous problem, suppose the fixed asset actually qualifies for 100 percent bonus depreciation in the first year. All the other facts are the same. What is the project’s Year 1 net cash flow now? Year 2? Year 3? What is the new NPV? Problem 12:

> In the previous problem, suppose the fixed asset actually falls into the three-year MACRS class. All the other facts are the same. What is the project’s Year 1 net cash flow now? Year 2? Year 3? What is the new NPV? Problem 11: In the previous problem,

> In the previous problem, suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the project’s Year 0 net cash flow? Year 1? Year 2

> In the previous problem, suppose the required return on the project is 12 percent. What is the project’s NPV? Problem 9: Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 mi

> Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $2.8 million in anticipation of using it as a warehouse and distribution site, but the company

> A project that provides annual cash flows of $15,300 for nine years costs $74,000 today. Is this a good project if the required return is 8 percent? What if it’s 20 percent? At what discount rate would you be indifferent between accepting the project and

> A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project? Year ……………………… Cash Flow 0 ………………………….. −$41,000 1 ………………………………. 20,000 2 ………………………………. 23,000 3 ………………………

> You find a zero coupon bond with a par value of $10,000 and 24 years to maturity. If the yield to maturity on this bond is 4.2 percent, what is the dollar price of the bond? Assume semiannual compounding periods.

> You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12.6 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net

> An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 9 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200? What if

> Kara, Inc., imposes a payback cutoff of three years for its international investment projects. If the company has the following two projects available, should it accept either of them?

> Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year ………………………………… Cash Flow 0 ………………………………… −$1,785,000 1 ………………………………………. 610,000 2 ………………………………………. 707,000 3 ………………………………………. 580,00

> Mako Corp. has a project with the following cash flows: Year ……………………………… Cash Flow 0 …………………………………… $25,000 1 …………………………….……… − 11,000 2 ………………………………………… 7,000 What is the IRR of the project? What is happening here?

> A project has the following cash flows: Year ……………………… Cash Flow 0 …………………………… $74,000 1 …………………………… − 49,000 2 …………………………… − 41,000 What is the IRR for this project? If the required return is 12 percent, should the firm accept the project? What is the

> The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of $180,000 for the firm during the first year, and the c

> An investment under consideration has a payback of seven years and a cost of $745,000. If the required return is 11 percent, what is the worst-case NPV? The best-case NPV? Explain. Assume the cash flows are conventional.

> Suppose the company in the previous problem uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. Calculate the MIRR of the project using all three methods using these interest rates.

> Draiman Corporation has bonds on the market with 14.5 years to maturity, a YTM of 5.3 percent, a par value of $1,000, and a current price of $987. The bonds make semiannual payments. What must the coupon rate be on these bonds?

> An investment project provides cash inflows of $835 per year for eight years. What is the project payback period if the initial cost is $1,900? What if the initial cost is $3,600? What if it is $7,400?

> Duo Corp. is evaluating a project with the following cash flows: Year …………………………………………… Cash Flow 0 ………………………………………………. −$53,000 1 ……………………………………………………. 16,700 2 ……………………………………………………. 21,900 3 ……………………………………………………. 27,300 4 …………………………………………………... 20,400

> An investment has an installed cost of $574,380. The cash flows over the four-year life of the investment are projected to be $216,700, $259,300, $214,600, and $167,410, respectively. If the discount rate is zero, what is the NPV? If the discount rate is

> Consider the following two mutually exclusive projects: Whichever project you choose, if any, you require a return of 11 percent on your investment. a. If you apply the payback criterion, which investment will you choose? Why? b. If you apply the disco

> The Michner Corporation is trying to choose between the following two mutually exclusive design projects: a. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept? b. If

> What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If it is 22 percent? Year ………………………………….. Cash Flow 0 ………………………………………. −$14,800 1 …………………………………….……

> Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year ……………………… Cash Flow 0 ………………….. −$52,000,000 1 ………………………. 74,000,000 2 …………………… − 12,000,000 a. If the company requires a return of 12 percent on its

> Consider the following two mutually exclusive projects: Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent. What is the crossover rate for these two projects?

> Bruin, Inc., has identified the following two mutually exclusive projects: a. What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct? b. If the required ret

> What is the IRR of the following set of cash flows? Year ………………………….. Cash Flow 0 ……………………………….. −$18,700 1 ……………………………………… 9,400 2 …………………………………… 10,400 3 ……………………………………… 6,500

> A major college textbook publisher has an existing finance textbook. The publisher is debating whether to produce an “essentialized” version, meaning a shorter (and lower-priced) book. What are some of the considerations that should come into play? To an

> What is the payback period for the following set of cash flows? Year …………………….. Cash Flow 0 …………………………… −$7,700 1 ……………………………….. 1,900 2 ……………………………….. 3,000 3 ……………………………….. 2,300 4 ……………………………….. 1,700

> Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $4.15 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company’s stock is 8 percent, 11 percent, and 14 percent, respectively.

> Fegley, Inc., has an issue of preferred stock outstanding that pays a $3.80 dividend every year in perpetuity. If this issue currently sells for $93 per share, what is the required return?

> Hailey Corp. pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years and will then cease paying dividends forever. If the required return on this stock is 10.7 percent, what is the current share price?

> Suppose you know that a company’s stock currently sells for $78 per share and the required return on the stock is 10.9 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s

> Caccamise Co. is expected to maintain a constant 3.4 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 5.3 percent, what is the required return on the company’s stock?

> Five Star Corporation will pay a dividend of $3.04 per share next year. The company pledges to increase its dividend by 3.75 percent per year indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company’s

> This one’s a little harder. Suppose the current share price for the firm in the previous problem is $67.25 and all the dividend information remains the same. What required return must investors be demanding on the company’s stock?

> Storico Co. just paid a dividend of $3.65 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growt

> Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in eq

> Westco Co. issued 15-year bonds a year ago at a coupon rate of 5.4 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5 percent, what is the current price of the bond in dollars?

> Consider four different stocks, all of which have a required return of 12 percent and a most recent dividend of $3.45 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, 0 pe

> Penguin, Inc., has balance sheet equity of $7.9 million. At the same time, the income statement shows net income of $832,000. The company paid dividends of $285,000 and has 245,000 shares of stock outstanding. If the benchmark PE ratio is 16, what is the

> In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.41. Th

> Regal, Inc., currently has an EPS of $3.25 and an earnings growth rate of 8 percent. If the benchmark PE ratio is 23, what is the target share price five years from now?

> In the previous problem, we assumed that the stock had a single stock price for the year. However, if you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a hig

> Meadow Dew Corp. currently has an EPS of $4.05, and the benchmark PE for the company is 21. Earnings are expected to grow at 4.9 percent per year. a. What is your estimate of the current stock price? b. What is the target stock price in one year? c. Assu

> Navel County Choppers, Inc., is experiencing rapid growth. The company expects dividends to grow at 18 percent per year for the next 11 years before leveling off at 4 percent into perpetuity. The required return on the company’s stock is 11 percent. If t

> Impossible Corp. just paid a dividend of $1.93 per share. The dividends are expected to grow at 24 percent for the next eight years and then level off to a growth rate of 3.5 percent indefinitely. If the required return is 12 percent, what is the price o

> You have found the following stock quote for RJW Enterprises, Inc., in the financial pages of today’s newspaper. What was the closing price for this stock that appeared in yesterday’s paper? If the company currently ha

> E-Eyes.com just issued some new 20/20 preferred stock. The issue will pay an annual dividend of $20 in perpetuity, beginning 20 years from now. If the market requires a return of 5.4 percent on this investment, how much does a share of preferred stock co

> Nikita Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $962. At this price, the bonds yield 5.1 percent. What must the coupon rate be on the bonds?

> Matterhorn Corporation stock currently sells for $49 per share. The market requires a return of 11 percent on the firm’s stock. If the company maintains a constant 3.5 percent growth rate in dividends, what was the most recent dividend per share paid on

> Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $12.40, but management expects to reduce the payout by 4 percent per year indefinitely. If you require a return of 9.5 percent on this stock, what will you pay for a share

> Orkazana Corp. is experiencing rapid growth. Dividends are expected to grow at 25 percent per year during the next three years, 15 percent over the following year, and then 6 percent per year indefinitely. The required return on this stock is 10 percent,

> Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 4 percent thereafter. If the required return is 10 percent, and the company just paid a divide

> McCabe Corporation is expected to pay the following dividends over the next four years: $15, $11, $9, and $2.95. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 10.3

> Premier, Inc., has an odd dividend policy. The company has just paid a dividend of $3.75 per share and has announced that it will increase the dividend by $5 per share for each of the next five years and then never pay another dividend. If you require a

> Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 9 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and

> Quinoa Farms just paid a dividend of $2.95 on its stock. The growth rate in dividends is expected to be a constant 3.4 percent per year indefinitely. Investors require a return of 15 percent for the first three years, a return of 13 percent for the next

> Z Space, Inc., is a new company and currently has negative earnings. The company’s sales are $2.7 million and there are 175,000 shares outstanding. If the benchmark price-sales ratio is 4.3, what is your estimate of an appropriate stock price? What if th