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Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,090 per unit; variable cost = $310 per unit; fixed costs = $4.82 million; quantity = 72,000 units. Suppose the company believes all of its estimates are accurate only to within ± 17 percent. Required: What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars. Round your answers to the nearest whole dollar amount (e.g.,1,234,567).) Scenario Unit Sales Unit Price Unit Variable Cost Fixed Costs Base case 72,000 $ 1,090 $ 310 $ 4,820,000 Best case Worst case
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.50coming 3 years from today. If the r..
A zero coupon bond with a face value of $1,000 is issued with an initial price of $425.50. The bond matures in 12 years. What is the implicit interest, in dollars, for the first year of the bond's life? Use semi annual compounding.
A company is considering buying a machine that would give a net cost savings of $70,000 per year for 10 years. The cost of the machine is $325,000. The company's weighted average cost of capital is 12%. What is the difference in the payback and disco..
Summit Systems will pay a dividend of $1.50 this year. If you expect Summit's dividend to grow by 6% per year, what is its price per share if its equity cost of capital is 11%?
Ghost Rider Corporation has bonds on the market with 10 years to maturity, a YTM of 6.5 percent, and a current price of $926. What must the coupon rate be on the company’s bonds?
What are some indications that investors are risk averse? How would you as a portfolio manager support these investors? What kind of recommendations would you make? What would you recommend as a portfolio manager to reduce the risk for a risk adverse..
Calculate the price of the following bonds, where F is the face value, c is the coupon rate, N is the number of years to maturity, and i is the interest rate (or discount rate, or yield).
The market value of NPU Ice Creamery equity is $8 million and the market value of its debt is $6 million, with book value of debt at $2 million and the book value of equity at $2.5 million.
In a period of rising sales, utilizing past cost and expense ratios (percent-of-sales method) when preparing pro forma financial statements will tend to ________.
Find the total profit if your position is Long Call in options. The price per share at expiration is $53. All calls and puts are lots of 100 shares. Prices and premiums are per share. Position: Long Call Strike Price: $50 Premium paid: $2.50 Profit =..
The risk that mortgages will prepay quicker than investors would like is called (???) risk and is associated with (???) market interest rates. The risk that mortgages will prepay slow than investors would like is called (???) risk and is associated w..
Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping’s cost of capital is 10.97 percent. What is the NPV of a project if the initial costs are $1,466,210 and the project life is estimated as 10 years? T..
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