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Dylans Donuts is thinking of purchasing a piece of equipment. The new equipment would be expected to increase sales by $350,000 a year and increase operating expenses by $105,000 a year. The new equipment would cost $1,260,000 and be depreciated using straight-line to a zero salvage value over a depreciable life of 8 years. The equipment would require additional net working capital of $24,000. It is expected that Dylans Donuts could sell the equipment at the end of its expected life for $15,000. Dylans marginal tax rate is 30% and its required rate of return is 12%. Dylans has a minimum required payback of 3 years.
(a) Determine if the project is worthwhile using the payback method.
(b) Calculate the MIRR of the project.
Tulley Appliances, projects next year's sales to be $20 million. Current sales are at $15 million based on current assets of $5 million and fixed assets of $5 million.
A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%.
Mr. and Mrs. Smith plan to purchase a home in Los Angeles in October, 2010. The purchase price of the home is $580,000. They plan to pay 20 percent down payment.
Theory about cost of debt as well as tax shield in US and conclusions can you reach analyzing corporate debt capacity
1. (Preferred Stock Valuation) What is the value of a preferred stock where the dividend rate is 13 percent on a $100 par value? The appropriate discount rate for a stock of this risk level is 12 percent.
A trader enters into a long position in one Eurodollar futures contract. How much does the trader gain when the futures price quote increases by 26 basic points?
Suppose you are planning to save for $140,000 Ferrari. You have $30,000 to invest and your bank pays 4.2% annual interest. How long before you have enough to buy the car?
ABC Company plans to control the cost of its capital and decides that the weighted average cost of capital, WACC, should be around 12 percent. ABC also has a target capital structure of 50% common stock.
Forecast of appreciation, depreciation, or no change in any particular Latin American currency describe
You want to bank enough money to pay for 4 years of college at $20,000 per year for your child. If you deposit the money on your child's 3rd birthday, how much should you deposit?
An investment has an installed cost of $567,382. The cash flows over the four-year life of the investment are projected to be $196,584, $240,318, $188,674, and $156,313.
The management wants the company to grow. Rather than pay out all of the firm's earnings as a dividend this year (t = 0), the management wants to plow back 60 percent of the earnings into the business.
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