You are considering investing in a project with the following year-end after-tax cash flows: Year 1: $57,000 Year 2: $72,000 Year 3: $78,000 If the initial outlay for the project is $180,000, compute the project's internal rate of return.
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Suppose that the annual expected rates of inflation over each of the next five years are 4 percent, 5 percent, 7 percent, 11 percent, and 10 percent, respectively. What is the average expected rate of inflation over the 5-year period? Use the arithme..
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If the actual dollar-pnut exchange rate is $1/pnut in 2013, is the pnut overvalued or undervalued relative to PPP?
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The Corner Store has $492,000 of sales and $275,000 of total assets. The firm is operating at 82% of full capacity. What is the capital intensity ratio at full capacity?
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If the annualized rate of return on insured tax-exempt municipal bonds will be 3% per annum and the inflation rate remains at 2% per annum, then what will be their real rate of return over 30 years?
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Kelly's Corner Bakery purchased a lot in Oil City 6 years ago at a cost of $302,000. Today, that lot has a market value of $340,000. At the time of the purchase, the company spent $15,000 to level the lot and another $20,000 to install storm drains. ..
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A project has the following estimated data: price = $89 per unit; variable costs = $33.82 per unit; fixed costs = $5,100; required return = 10 percent; initial investment = $11,000; life = seven years. Ignore the effect of taxes. What is the financia..
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You are considering two mutually exclusive projects. Project A has cash flows of -$74,900, $18,400, $26,300, and $57,100 for years 0 to 3, respectively. Project B has cash flows of -$79,000, $18,400, $22,700, and $51,500 for years 0 to 3, respectivel..
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A company's 8% coupon rate, semi-annual payment, $1,000 par value bond that matures in 20 years sells at a price of $593.17. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calcula..
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These are the forecasts of revenues over the lifetime of a project. Assume all cash flows occur at the end of the year. In the first part of this question, you are asked to only calculate the present value of the discounted costs and revenues. What i..
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Benson Bakeries generated net income of $250,000 on total revenues of $525,000 this year. At year end, the company had accounts receivable of $35,000, accounts payable of $52,500, inventory of $58,000, cash of $50,000, and short-term notes payable of..
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The index is standing at 400, and the futures price for a contract deliverable in four months is 405. What arbitrage opportunities does this create?
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