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Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $26,800, and the company expects to sell 1,530 per year. The company currently sells 2,030 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,850 units per year. The old board retails for $22,700. Variable costs are 54 percent of sales, depreciation on the equipment to produce the new board will be $1,480,000 per year, and fixed costs are $1,380,000 per year. If the tax rate is 34 percent, what is the annual OCF for the project?
What is the real interest rate, both accurate and approximate? - What is the correct project PV? - What would you get if you grew a perpetuity project of $20 by the real growth rate of 1%.
Given the following facts about a project, determine both the accounting break-even level of units sold and the NPV break-even level of units sold.
Blue Crab, Inc. plans to issue new bonds, but is uncertain how the market would set the yield to maturity. The bonds would be 26-year to maturity, carry a 11.54 percent annual coupon, and have a $1,000 par value. Blue Crab, Inc. has determined that t..
Bourdon Software has 12 percent coupon bonds on the market with 16 years to maturity. The bonds make semiannual payments and currently sell for 108.8 percent of par. Current yield is 9.63%. What is the YTM? What is the effective annual yield?
Sparks Electrical has just won the contract to wire a new high rise office building to be built in Phoenix. The contract requires the purchase and installation of 1,125 thousand feet of copper wire. A properly constructed cross hedge is established b..
Blue Inc. desires a weighted average cost of capital of 13.2 percent. The firm has an after-tax cost of debt of 4.8 percent and a cost of equity of 15.2 percent (assume that these costs do not change with the capital structure). What debt-equity rati..
A discussion of the WAC of the pass-through MBS the group has created and whether it represents a coupon rate indicative of a high credit quality or a lower credit quality pool of mortgages
A company issued preferred shares two years ago, paying a $3.85 dividend, which offered investors an original yield of 9%. Currently, the required return on companies with preferred shares of comparable risk yield 9%. Given this information, what sho..
A LONG forward contract that was negotiated some time ago will expire in 2.5 years and has a delivery price of $60. The current stock price underlying this forward contract is $65. The risk-free rate with continuous compounding is 7% for all maturiti..
Mandolin Bottlers Co. has net income of $4,272,335 and retains 65 percent of its income every year. If the company's internal growth rate is 8.6 percent, what is the firm’s total assets? (Round your answer to the nearest dollar.)
Company Wii gives you the following information for its operation. The expected income available for dividends is $42 million next year before the firm has any debts. Suppose there is a 25% corporate income tax imposed on the company. What is the co..
Consider a project with the following cash flows -100, 230 and -134 at time 0, 1 and 2, respectively. Obtain the IRR(s) of the project. Consider a project with the following cash flows -100, 230 and -134 at time 0, 1 and 2, respectively. Obtain the N..
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