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Masters Golf Products, Inc., spent 3 years and $1,000,000 to develop its new line of club heads to replace a line that is becoming obsolete. To begin manufacturing them, the company will have to invest $1,800,000 in new equipment. The new clubs are expected to generate an increase in operating cash inflows of $750,000 per year for the next 10 years. The company has determined that the existing line could be sold to a competitor for $250,000.
a. How should the $1,000,000 in development costs be classified?b. How should the $250,000 sale price for the existing line be classified?c. Depict all of the known relevant cash flows on a time line.
Outstanding bonds have a $1,000 par value and will mature in 5 years, yield to maturity is 9%-Find out the bonds's annual interest rate?
Kline Construction is an all-equity firm that has projected perpetual earnings before interest and taxes of $879,000. What is the levered value of the firm?
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Most initial public offerings (IPO) are made with assistance of an investment banker. Main activity of an investment banker is underwriting the issue.
Evaluate the required return for an asset with a beta of .90 when the risk-free rate and market return are 6% and 10% respectively and fine the risk-free rate for a firm with a required return of 12% and a beta of 1.25
A McDonalds Big Mac value meal consists of a Big Mac sandwich, large Coke, and a large fry. Assuming that there is a competitive market for McDonalds food items
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Explain the different types of partnership that Joe and Bill might form.
Set up the fund of semi-annual payments to be compounded semi-annually to accumulate the some of $100,000 after 10 years at 8 percent annual rate (20 payments). Find out how much the semi-annual payment should be. (round to whole numbers.)
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