Answer:
NPV = $39,230
Payback period = 3.64 years
Explanation:
The net present value (NPV) = (net annual cash flow x interest factor) - investment
NPV = ($110,000 x 3.993) - $400,000 = $439,230 - $400,000 = $39,230
The payback period = investment / net annual cash flow = $400,000 / $110,000 = 3.64 years or 3 years, 7 months and 19 days
You can also calculate the PV of each annual cash flow which will give you a more precise result, but the variation is minimal:
PV = ($110,000 / 1.08) + ($110,000 / 1.08²) + ($110,000 / 1.08³) + ($110,000 / 1.08⁴) + ($110,000 / 1.08⁵) = $439,198
and the NPV = $39,198
Answer:
a. What is the average annual return?
average annual return (mean) = (-4.5% + 28.1% + 12.2% + 3.7%) / 4 = 9.875%
b. What is the variance of the stock's returns?
variance = [(-4.5% - 9.875%)² + (28.1% - 9.875%)² + (12.2% - 9.875%)²) + (3.7% - 9.875%)²] / 4 = (206.64 + 332.15 + 5.41 + 38.13) / 4 = 582.33 / 4 = 145.5825
c. What is the standard deviation of the stock's returns?
standard deviation = √145.5825 = 12.06%
The answer is $52,000 my friend.
Answer:
a. $69.46
b. 58.15
Explanation:
a. Price = Benchmark PS ratio × Sales per share
<u>Sales per Share</u>
= Sales / Shares outstanding
= 2,100,000/130,000
= $16.15
Price = 4.3 * 16.15
Price = $69.46
b. PS Ratio is 3.6
Price = Benchmark PS ratio × Sales per share
Price = 3.6 * 16.15
Price = $58.15
Answer: b. gives the firm a built-in market for new securities.
Explanation:
Rights offering are issued by companies when such companies wants to generate additional capital. This may be necessary when such company wants to meet its financial obligations and therefore need extra capital.
A rights offering gives the firm a built-in market for new securities as the security holder are already aware of the company and just buys additional securities.