FIN4111 Analytic Finance Academy Investments Assignment Solution From MBA Experts
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- Referencing Styles: Not Selected
- Word/Pages: 12
- Course Code: FIN 4111
- Course Title: analytic finance academy investments
There are seven questions in this assignment, attempt all questions and show all the steps clearly.
1.Consider the following (all figures are in thousands) of the plant and property of a firm:
- Original Cost = $18,000. Salvage Value = $3,000. n = 5 years.
- Expected Service life = 180,000 hours.
- Hours worked: Yr 1 – 40,000 hrs, Yr 2 – 35,000 hrs, Yr 3 – 45,000 hrs, Yr 4 – 20,000 hrs, Yr 5 – 40,000 hrs.
(a)Using the straight-line method to calculate the depreciation rate, depreciation expenses, accumulated depreciation and net book value of the assets.
(b)Using double declining method to calculate the depreciation rate, depreciation expenses, accumulated depreciation and net book value of the assets.
(c)Using the services-hours method, calculate the cost per service hour, depreciation expenses, accumulated depreciation and the net book value of the assets.
2.In its latest annual report, a company reported the following for its machinery and equipment:
- Gross investment = $42,404,000
- Accumulated Depreciation = $17,488,000
- Depreciation Expense = $3,117,000
- Calculate the average depreciable life, average age and relative age.
3. I.T. bonds pay 15% coupon semi-annually for every six months with the face value of $1,000. Calculate the value of the bond when there are 14 years remaining until maturity and interest rate at 10% p.a.
4.Refer back to question 3 if the same bonds pay a coupon every year. What is the bond price at present?
5.Find the current market price of AAA Corporation with expected dividends next year of $12 per share and investors required rate of return is 15%. AAA is a zero growth firm.
6.A company is expected to pay a $20 dividend next year. Analysts believe that dividends will rise at 2% per year for the foreseeable future. The investors think that the required rate of return, R on this stock is 5%. What is the value of a share of that company?
7.He predicts that Kowloon Ltd will suffer huge losses after 3 years and he wants to sell the stock after 3 years at the price of $55 per share. He expects the stock will grow at 6% per year during the coming 3 years. Calculate the stock price you are willing to buy at present if current dividends equal $5 per share and required rate of returns on equity is 10% per annum