Saturday, May 11, 2019
Finance and Investment Research Paper Example | Topics and Well Written Essays - 1500 words
Finance and Investment - Research report Example9 331,434.0012%10371,207.0012%11415,752.0012%12465,642.0012%13652,519.0012%14584,101.0012%15654,193.0012%16732,696.0012%17820,620.0012%18919,094.0012%ii) The present value amount of cream B 125,000.00 x 7.22497 = 906,212.50iii) The equivalent rate of issue 906,212.50 - 900,000.00 = 6,212.50f.i)Cash flow plot if Mr. Gordon behaves Option C. (principal + interest) No. of periods payments%rate1122,100.0011%2135,531.0011%3150,439.0011%4166,987.0011%5 185,355.0011%6207,598.0012%7232,510.0012%8260,411.0012%9291,660.0012%10326,659.0012%11365,858.0012%12409,761.0012%13458,932.0012%14514,004.0012%15575,684.0012%16644,766.0012%17722,138.0012% 18808,795.0012%ii) The present value of extract C 110,000.00 X 7.2497 = 797,467.00iii) The equivalent rate of Gordon from option C900,000.00 - 797,467.00 = 102,533.00g.I have to choose option B because for Mr. Gordon because as the graph or diagram clearly states that Mr. Gordon would be receiving muc h that optionA or C.h.i) Cash Flow Diagram if Gordon accepts option C no. of paymentspayments%rate 1122,100.0011% 2135,531.0011% 3150,439.0011% 4 168,492.0011% 5687,026.00ii)Present value of option C 110,000.00 X 3.1024 = 341,264.00j. i) If I were asked by Mr. Gordon my ruling on what option would I advice him, My recommendation would be...He can spend his money in a more relaxed manner because it would be more that what hell beneeding. It is just like saying that he had his money invested sagelythrough his contributions during the 35 years that he spent working.Outlay should be ignored. The initial capital or investment for the machine is, $150,000.00. I assumed that the company has enough resources ot cover for this. After tax one-year cost of continuing to buy the self sealing container.b. i) Based on the information, presented, system B should kylie recommend for purchase by company. This system has a scrap value/ salvage value at the end of useful life. The system will stil l be valued in the end. Besides, this system has a lower cost of operation, and repair and maintenance, which means lower expenses for the company that will result to higher income taxationii) Since the company is all equity financed, it very possible to accept both quality control systems. getting both systems is costly, but the gains that will be incurred by the manufacturing company will definitely give stake the costs of acquiring the two systems. It will also not be a problem to accept both because dividends paid to shareholders are at a lower rate per share.