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problem1. Rent-to-Own Equipment Co. is considering new inventory system which will cost $750,000. The system is anticipated to generate positive cash flows over the upcoming four years in the amounts of $350,000 in year one, $325,000 in year two, $150,000 in year three, and $180,000 in year four. Rent-to-Own's required rate of the return is 8%. What is net present value of this project?

problem2. Which of the following statements regarding 30-year monthly payment amortized mortgage with the nominal interest rate of 10% is CORRECT?

a. The total dollar amount of interest being paid off per month gets larger as the loan approaches maturity.

b. The monthly payments will rise over time.

c. Exactly ten percent of the first monthly payment represents interest.

d. A larger proportion of the first monthly payment will be interest, and smaller proportion will be principal, than for last monthly payment.

e. The amount representing interest in first payment would be higher if the nominal interest rate were seven percent rather than ten percent.

problem3. Last year hunter corporations sales were $225million. When sales grow at six percent per year, how large (in millions) will they be five years later?

Quexstion4. The Corner Bakery has a bond issue outstanding that matures in seven years. The bonds pay interest semi-annually. Currently, the bonds are quoted at 101.4 percent of face value and carry a nine percent coupon. What is firm's after-tax cost of debt when the tax rate is 30 percent?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93888

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