SETAL has an unlevered cost of equity equal to 12% and a tax rate of 31%. In years one, two, and three, the expected interest expenses are $117, $239, and $353, respectively. After Year 3, the interest expenses are forecasted to increase at a constant 4% each year.
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SETAL has an unlevered
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- A firm will report annual Net Income of $50 and depreciation expense of $20 forever in the future. With a tax rate of 30%, how much is the present value of all future “tax shields”? Assume r = 4%.Light company Intends to introduce a soft drink in the market in the next year. The projected revenues and expenses for the next five years are as follows: Year 1 2 3 4 Revenues 300M 200M 315M 420M Expenses 160M 50M 115M 200M The initial capital outlay is 500M which will be depreciated over the four-year period. The prevailing tax rate is 30%. What is the Accounting Rate of Return (ARR)? Select one: A. 14.7% B.21% C.25.5% D.None of the aboveUsing the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, calculate the TAX SHIELD. Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 Group of answer choices 101.36 158.33 82.85 46.37
- To find the after-tax interest rate, the before tax interest rate is multiplied by If the current and expected future one-year interest rates are 5%, 6%, 7%, using the expectations theory of the term structure, the three-year interest rate is ___? If the current and expected future one-period interest rates are 5%, 6%, 7%, 5% and 5%, and the liquidity premium is 0.4%, the five-period interest rate is A steep yield curve indicates that interest rates are expected to future. in the An inverted yield curve may be due to a Federal Reserve policy of increasing short- term interest rates to fight what economic problem?Calculate the present value of the tax savings due to financing the 3 situations below. Use a 22% tax rate. A) A mortgage loan of $ 400,000 with an amortization period of 20 years, the borrowing rate is 7% annual capitalized semi-annually and the payments are monthly. B) A loan of $ 400,000 in the form of a bond with a coupon rate and yield to maturity of 7% (annual capitalized semi-annually), and maturity of 20 years C) A loan of $ 400,000 with constant principal repayments and additional interest, the borrowing rate is 7% annual capitalized semi- annually and the payments are annual over a 20-year amortization period.Suppose that you have an investment that earns 0% in the first year, but 20.7% in the second year. What rate of interest, compounded annually, would yield the same return after two years? (Answer in percentage)
- The present worth of income from an investment that follows an arithmetic gradient is projected to be $475,000. The income in year one is expected to be $25,000. What is the gradient each year through year 6 at an interest rate of 10% per year?Assume that at the beginning of the year, you purchase an investment for $7,200 that pays $100 annual income. Also assume the investment's value has decreased to $6,800 by the end of the year. (a) What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.) Rate of return % (b) Is the rate of return a positive or negative number? Positive O NegativeSuppose that you can make an annual profit of $600 on an investment of $4000. Suppose you borrow the investment amount at an annual interest rate of 8%. Your updated expectation of inflation is 6%. Then your gross real returns (before loan payment) is _____ and your net real returns (after loan payment) is ______.
- An investment will provide after-tax revenue of $22,336 per year for 7 years. What is the present value of this revenue stream assuming a discount rate of 5.25%?Suppose your principal investment is $1800 and you have a nominal interest rate of 6.5%. what is your nominal interest income? Presume you are taxed at the 22% tax rate, who much will you pay in taxes and what is your after tax nominal income? Presume inflation was 2.7% during the year, what is the loss of principal due to inflation? What is your real interest income? What is after-tax real interest income?A lot purchased for $4,500 is held for five years and sold for $13,500. The average annual property tax is $45 and may be accounted for at an interest rate of 12%. The income tax rate on the long term capital gain is 15% of the gain. What is the rate of return on the investment if the allowance for inflation is treated at an average annual rate of 7%?