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The Seattle Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What is the NPV for this investment? Now assume the Federal Reserve takes actions which increases interest rates and therefore impacts the firm's WACC. If the new WACC for Seattle Corporation becomes 14 percent By how much did the change in the WACC affect the project's forecasted NPV? That is, find the ?NPV resulting from the Federal Reserve actions.
how much must you deposit today into an account earning 8% interest if you want to have $115,000 in the acccount in 10 years?
The Sunny Days Company just paid a divident of $1 per share, and that dividend is expected to grow at a constant rate of 5% per year in the future. The company's beta is 1.2, the market risk premium is 5%, and the risk-free rate is 3%.
Assume that the CAPM is a good description of stock price returns. The market expected return is 7% with 10% volatility and the risk-free rate is 3%. New news arrives that does not change any of these numbers
Six years from now, you will be inheriting $100,000. What is this inheritance worth to you today if you can earn 6.5 percent interest, compounded annually
You are analyzing a project and have developed the following estimates: unit sales = 1,320, price per unit = $79, variable cost per unit = $43, fixed costs = $24,900. The depreciation is $11,300 a year and the tax rate is 40 percent.
If you deposit $3,500 today into an accoun earning an 11 percent annual rate of return, what would your account be worth in 35 years (assuming no further deposits). In 40 years.
Inflation is expected to remain constant in the future at 3.3%. Default-risk premium is expected to remain constant at the rate of 1.8% . The liquidity risk is only 0.03% on the bonds.
We are evaluating a project that costs $1,582,000, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project.
To finance the new venture two plans have been proposed. Plan A is an all common equity structure in which $2.3 million dollars would be raised by selling 86,000 shares of common stock.
Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format.
A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity. Given the following information, calculate the firm's weighted average cost of capital.
Franklin Templeton has just invested $9,160 for his son (age one). This money will be used for his son's education 17 years from now. He calculates that he will need $53,882 by the time the boy goes to school.
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