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Contracting Inc. is bidding upon a service contract for Harvard to maintain and upgrade three classrooms per year for the next nine years. The contract will require purchasing $1,872,000 in equipment that will be depreciated using straight-line depreciation to a zero book value over the project's life. The equipment can be sold for $325,000 at the end of the service contract. They will also need $140,000 in net working capital over the life of the contract. While performing the contract work, they expect to incur fixed costs of $500,000 per year and a variable cost of $173,000 per classroom. They will also face a corporate tax rate of 40%. If the required rate of return is 15%, what is the minimum offer they can make per classroom and still turn an economic profit?
Calculate the additional funds needed (AFN) using the percentage of sales method and prepare Year 2015 pro-forma balance sheet. Calculate ABC’s stock price using FCF based valuation model without using computer software like “Excel”.
Burke Tires just paid a dividend of D0 = $1.50. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the..
horizontal analysis. mary lynn corporation has been operating for several years. selected data from the 20x1 and 20x2
What determines the price of financial instruments? Which are riskier, capital market instruments or money market instruments? Why? What are the four major functions of the Federal Reserve System? What are the main responsibilities of the FOMC?
Stock R has a beta of 1.3, Stock S has a beta of 0.4, the expected rate of return on an average stock is 11%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less ris..
Consider the following data: fixed costs = $10 million, variable cost per unit = $400, and revenue per unit = $1,200. For this organization, which of the following statements is most correct?
Suppose we are assuming a $5 million 20-year mortgage with 8 years remaining at a rate of 4%. If we could obtain a new 8-year mortgage for 5%, what is the value of assuming this mortgage?
international financial managementquicknourish plc is considering new developments abroad. the two prime candidate
FFDP Corp. has yearly sales of $28 million and costs of $12 million. The company’s balance sheet shows debt of $54 million and cash of $18 million. There are 950,000 shares outstanding and the industry EV/EBITDA multiple is 7.5. What is the stock pri..
Assume a stock selling for $50.36 has a dividend yield of 1.7 percent and a PE ratio of 18.4. What is the earnings per share (EPS) for the company?
Mary Chong, capital expenditure manager for PDA Manufacturing, knows that her company is facing a series of monthly expenses associated with installation and calibration of new production equipment. The company has $1 million in a bank account right ..
Describe the major trends or observations that the income statement analysis highlights, and provide an opinion on what this means to the company. Describe the major trends or observations that the balance sheet analysis highlights, and provide an op..
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