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You are analyzing the purchase of new equipment. Since you are not an expert on this type of equipment, you hire a consulting firm to make recommendations. The consultant charged you $1,500 and recommended the purchase of the latest model from ACME Corp. of America. The equipment costs $80,000, and it will cost another $10,000 to modify it for special use by your firm.
The equipment will be depreciated on a straight-line basis over six years with no salvage value. You expect the equipment will be sold after three years for $28,000. Use of the equipment will require an increase in your company's net working capital of $4,000, but this $4,000 will be recovered at the end of year three. The use of the equipment will have no effect on revenues, but it is expected to save the firm $50,000 per year in before-tax operating costs. Your company's marginal tax rate is 35%. What is the terminal cash flow for this project? a. $17,000 b. $24,500 c. $33,950 d. $37,950
Calculate the value of stock under constant growth model with required return and declining growth rate
How much of the capital budget must be financed by common equity to maintain the optimal capital structure? How much of the new funds are generated by new debt? By new stock?
Project Z requires an Initial (Year 0) Investment of $2,000,000; and will return $555,000 for each year of its six (6) year useful life. If the project's required rate of return is 16%, what is the Net Present Value (NPV) of the Project Z?
It will cost $2,800 to acquire a small ice cream cart. Cart cash flows are expected to be $2,000 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What..
What is the yield to maturity on a 10 year,9% annual coupon, $1,000 par value bond sells at $887? That sells at $1,134.20? What does the fact that a bond sells at discount or at a premium tell you about the relationship between rd and the bonds co..
as a manager of a firm you are concerned about a potential increase in interest rates which would reduce the demand for
patterson inc. receives a 16000 payment two years in advance of delivering a completed novel. a five percent interest
It had $8,000 of bonds outstanding that carry a 14% interest rate. How much was the firm's taxable income, or earnings before taxes (EBT)?
there are two ways to calculate the expected return of a portfolio either calculate the expected return using the value
O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $975. What is the bond's nominal coupon interest rate?
What were the total dividends paid to shareholders during the most recent year?
You are thinking an investment in either individual stocks or a portfolio of stocks. The two (2) stocks you are researching, stocks A & B, have the following historical returns;
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