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Digital Organics (DO) has the opportunity to invest $1.10 million now (t = 0) and expects after-tax returns of $700,000 in t = 1 and $800,000 in t = 2. The project will last for two years only. The appropriate cost of capital is 12% with all-equity financing, the borrowing rate is 8%, and DO will borrow $400,000 against the project. This debt must be repaid in two equal installments. Assume debt tax shields have a net value of $0.30 per dollar of interest paid. Calculate the project’s APV. (Do not round intermediate calculations. Rounddown your answer to the nearest whole dollar.)
Adjusted present value $
Consider a 4.80 percent TIPS with an issue CPI reference of 201.2. total return of tips in percentage? and total return of tips in dollars?
You recieve a payment today of $2,000,000, and then monthly payments of $35,000 each for 4 years (48 total monthly payments), with the first of the monthly payments occurring one year from today. If you use a discount rate of 2.28% APR with monthly c..
Fama's Llamas has a weighted average cost of capital of 11.5 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 8 percent. The tax rate is 33 percent. What is the company's target debt-equity ratio?
What is the net present value of a project that has an initial cost of $89,000 and produces cash inflows of $21,000 a year for 7 years if the discount rate is 11.5 percent?
Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12 million. This investment will consist of $2 million for land and $9.60 million for trucks and ot..
Suppose that a firm has, as of this year, an Earnings Before Interest and Taxes of $117 million, Depreciation of $10 million, has bought $25 million in machinery, has sold $12 million in old machinery for cash, has had an increase in Accounts Receiva..
Suppose the basis spread, S-F, is falling. How can you use this fundamental information to take an investment decision in iotions and swaps? Further, does your decision contradict the normal backwardation theory of keynes? why or why not?
As of this morning, your firm had a ledger balance of $775 with no outstanding deposits or checks. Today, your firm deposited six checks in the amount of $79 each and wrote a check in the amount of $330. What is the amount of the collection float as ..
Suppose you will need $175,000 in 7 years to start up a new gym. With a 6% interest rate, how much do you have to invest now in order to achieve this goal? Repeat Question, but this time assume you contribute an equal amount each year. What would be ..
You place an order for 320 units of inventory at a unit price of $180. The supplier offers terms of 3/15, net 30. How long do you have to pay before the account is overdue? Days until overdue days a-2 If you take the full period, how much should you ..
Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. What is Z-prime’s stock price?
Both bond A and bond B have 7 percent coupons and are priced at par value. Bond A has 5 years to maturity, while bond B has 16 years to maturity. If interest rates suddenly rise by 1.4 percent, what is the percentage change in price of bond A and bon..
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