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Ronald Thump is interested in expanding his firm. After careful consideration, he has determined three areas in which he might invest additional funds: (1) product research and development, (2) manufacturing operations improvements, and (3) advertising and sales promotion. He has $500,000 available for investment in the firm. He can invest in its advertising and sales promotion program every year, and each dollar invested in this manner is expected to yield a return of the amount invested plus 20% yearly. He can invest in manufacturing operations improvements every 2 years, with an expected return of the investment plus 30% (at the end of each 2-year period). An investment in product research and development would be for a 3-year period, with an expected return of the investment plus 50% (at the end of the 3-year period). To diversify the total initial investment, he wishes to include the requirement that at least $30,000 must be invested in the advertising and sales promotion program, at least $40,000 in manufacturing operations improvements, and at least $50,000 in product research and development initially (at the beginning of the first year). Ronald wants to know how much should be invested in each of the three alternatives, during each year of a 4-year period, to maximize the total ending cash value of the initial $500,000 investment. a. Formulate a linear programming model for this problem. Make sure you show the formulation. b. Solve the model by using the computer. Have to put this in excel solver.
Please show/explain work. Scott Investors, Inc, is considering the purchase of a 412,000 computer with an economic life of 5 years. The computer will be fully depreciated over five years using the straight-line method.
Timothy Clum is in the 25 percent tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years, assuming the investment earns 8 percent annually. What is the amount of earnings that Timothy gives up by ..
Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio. Company D's has an expected return of 9.0% and a beta of .75. The total value of the inv..
What is the yield to maturity of a five-year, $5000 bond with a 4.5% coupon rate and semi annual coupons if this bond is currently trading for a price of $4876?
Bond Y is no callable, has 10 years to maturity, a 8% annual coupon, and a $1,000 par value. If you buy it, you plan to hold it for 4 years. You and the market have expectations that in 4 years the yield to maturity on a 6-year bond with similar risk..
Tim Dye, the CFO of Blackwell Automotive, Inc., is putting together this year's financial statements. He has gathered the following balance sheet information: The firm had a cash balance of $23,015, accounts payable of $163,257, common stock of $313,..
A 5.10 percent coupon bond with 15 years left to maturity can be called in three years. The call premium is one year of coupon payments. It is offered for sale at $1,060.30. What is the yield to call of the bond?
Intensive Care Urology Practice (ICUP), a not-for-profit business, had revenues in 2015 of $144,000. Expenses other than depreciation were 75% of revenues and Depreciation was $15,000. Construct ICUP’s Income Statement. What was ICUP’s Cash Flow for ..
Middleton Clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2010. One year later, at the end of 2011, the clinic had $575,000 in assets and $380,000 in equity. What was the clinic’s dollar growth in assets during 201..
Delta Corporation earned $2.50 per share during fiscal year 2011 and paid cash dividends of $1.00 per share. During the fiscal year that just ended on December 31, 2012, Delta earned $3.00 per share and the firm's managers expect to earn this amount ..
1.Demonstrate that bond yields and interest rates reflect the effect of six different things. 2. Explain how each of these concepts influence investors: expected future inflation, interest rate risk, default risk, taxability and lack of liquidity
The capital accounts of Hogan and Moss have balances of $90,000 and $65,000, respectively on January 1, 2011, the beginning of the current fiscal year. Prepare a statement of partners' equity for 2011 for the partnership of Hogan and Moss. If an amo..
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