NAME : Nandira Boy C
CLASS : FINANCIAL MANAGEMENT – MIDLE TEST
1.
P5-1: Rate of return, kt=(Pt-Pt-1+Ct)/Pt-1
X: Pt-1=20000, Ct=1500, Pt=21000
Y: Pt-1=55000, Ct=6800, Pt=5500
A) X: kt = (21000-20000+1500)/20000= 12,5%
Y: kt= (55000-55000+6800)/55000= 12,36%
b) Investment X should be selected because it has a higher rate of return for the same level of risk.
2.
0,88 / 22 = 4% > Dividend yield (antwoord op de vraag)
The capital gain rate is
(23,54 – 22) / 22 = 0,07 = 7.0%
The total return is
0,88+23,54/22 – 1 = 0,11 = 11% > equity cost of capital
3.
a. If the required rate of return is 15 percent, what is the net present value of the project?
Is it acceptable?
And 15% said it was a good project cash flow is equal to the table so we'll use 2 K gave us the first thing is the
period
CF
(15%)
PV x CF (NPV)
0
-700,000
1.000
- 700,000
1
-1000,000
0.870 n=1
- 870,000
2
250,000
0.756 n=2
189,000
3
300,000
0.658 n=3
197,400
4
350,000
0.572 n=4
200,200
5 to 10
400,000
- = 2.164 (Table )
865,600
-117,800 = NPV
Reject the project because NPV is negative..
b. What is its internal rate of return?
It said 15% of the Exercise good project cash flow is equal to the table so we'll use 2 K gave us the
14% = (-700,000) x (1.000) + (1,000,000) x (0.877) + (250,000x0.769) + (300,000x0.675) + (350,000x0.592) + (400,000x2.302)