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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.49 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,010,000 in annual sales, with costs of $719,000. The project requires an initial investment in net working capital of $230,000, and the fixed asset will have a market value of $295,000 at the end of the project. If the tax rate is 34 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (MACRS schedule) (Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places, e.g., 32.16.) Years Cash Flow Year 0 $ Year 1 $ Year 2 $ Year 3 $ If the required return is 16 percent, what is the project's NPV?
Nally, Inc., is considering a project that will result in initial aftertax cash savings of $6.9 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. What is the maximum cost Nally would be wi..
Construct a pro forma income statement for the first year and second year for the assumptions - Price per unit increases to $11.50, and unit of sales increases by 5%, all other assumptions remain the same.
A firm that follows a residual dividend policy will probably have:
A municipal bond with a coupon rate of 3.1 percent has a yield to maturity of 4.1 percent. Assume a face value of $5,000. If the bond has 8 years to maturity, what is the price of the bond?
An engineering firm estimates that its cost for employer sponsored health insurance will be $750,000 next year and increase at 11% per year for the next 5 years. The company CFO wants to budget a uniform amount each year to cover these costs. If the ..
You are trying to decide whether to invest some idle cash in undeveloped land or gold. You intend to hold either investment for 5 years before selling out and sailing the Caribbean. You have made the following estimates of the value of the land and g..
Your firm is considering building a new office complex. Your firm already owns land suitable for the new complex. The current book value of the land is $100,000; however, a commercial real estate agent has informed you that an outside buyer is intere..
Assume a municipal bond has 18 years until maturity and sells for $5640. It has a coupon rate of 5.70% and it can be called in 10 years. What is the yield to call if the call price is 110% of par?
Consider a binomial model S(0) = 100 and r = .01 and two possible return values m1 = .05 and m2 = −.03. Find the (time 0) value of a European call with expiry time at step 5 and strike price X = 105. Find the (time 0) value of a European put with exp..
Companies such as IKEA are taking the lead in developing a sustainable supply chain. Watch the video, Let's Go All-In on Selling Sustainability, then read both the Accenture report on, Sustainable Supply Chain Management and the Business Week article..
Select a major industrial or commercial company based in the United States and listed on one of the major stock exchanges in the United States. Each student should select a different company. What is the company’s current actual beta? What is the ca..
Mr. Johnson is considering investing in a project with a beta coefficient of 1.35. What would you recommend if this investment has an 11.5 percent rate of return, risk-free rate is 2.5 percent, and the rate of return on the market portfolio of assets..
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