Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.7 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact it can be sold after 6 years for $638,000. The firm believes that working capital at each date must be maintained at a level of 15% of next year’s forecast sales. The firm estimates production costs equal to $1.70 per trap and believes that the traps can be sold for $8 each. Sales forecasts are given in the following table. The project will come to an end in 6 years., when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, and the required rate of return on the project is 10%. Use the MACRS depreciation schedule.
Year: 0 1 2 3 4 5 6 Thereafter
Sales (millions of traps) 0 .5 .6 .8 .8 .6 .4 0
Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV? (Enter your answer in millions rounded to 4 decimal places.)
NPV $ million
The internal rate of return: may produce multiple rates of return when cash flows are conventional. is best used when comparing mutually exclusive projects. is rarely used in the business world today.
The risk free rate of interest is 2.5%. Inflation is expected to be 1.6% this year, 2% next year and 3% the following years. Assume the maturity risk premium is calculated to be .15x (t-1)% default risk premium is fixed at 1% and liquidity premium is..
Your mother is trying to choose one of the following bank CDs to deposit $10,000. Which will have the highest future value if she plans to invest for three years? (A) 3.50% compounded daily (B) 3.25% compounded monthly (C) 3.40% compounded quarterly ..
An insurance company is offering a new policy to its customers. Typically the policy is bought by a parent or grandparent for a child at the child’s birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following ..
Red's Radical Rhinitis Solutions (RRRS), a pharmaceutical manufacturer wants to know what rate it should use to discount the cash flows generated by its assets. You have calculated RRRS' beta of assets as 2.8. You looked at long term historical data ..
Municipal general obligation bonds are ____. Municipal revenue bonds are ____. Some bonds are "stripped," which means that. Leveraged buyouts are commonly financed by the issuance of:
Different businesses have very different policies on the payment of dividends and what that communicates to stockholders. Basically there are two ways to reward stockholders: 1) pay them via dividends and 2) pay them with capital appreciation of thei..
Choose of the following statements about opportunity costs is false? The opportunity cost rate to be applied to any investment is the rate of return that could be earned on alternative investments of similar risk.
A grocery store estimates that customers arrive at the rate of 15 per hour. The cashier can serve customers at a rate 20 per hour. Calculate the average amount of time customer waits in a line (in minutes)
You are considering an investment in a new sub-industry of interest to your firm. To understand the importance of terminal value assumptions you have decided to calculate NPV under two different sets of assumptions. The appropriate discount rate for ..
Twelve yours ago, you deposited 3400 into an account; seven years ago you added an additional 1000 to this account. You earned 8 percent, compounded annually, for the first 56 years and 5.5 percent. Compounded annually for the last 7 years. How much ..
Pasqually Mineral Water, Inc., will pay a quarterly dividend per share of $1.20 at the end of each of the next 12 quarters. Thereafter, the dividend will grow at a quarterly rate of 1.8 percent, forever. The appropriate rate of return on the stock is..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd