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A company incurred a cost of $500,000 2 years ago to acquire the development rights to a property for which an offer of $1 million cash has been received now at time 0. The $500,000 acquisition cost incurred at year -2 will be written-off against the sale value if sold at time 0, or assume it has been amortized over the production years 1 through 5 in calculating the after-tax cash flows given. Any gain from the sale would be taxed as ordinary income at the effective tax rate of 40%. Development of the property would generate escalated dollar after-tax cash flow in millions of dollars of -1.5 in year 0, and +1.0, +1.8, +1.2, +0.8 and +0.4 in years 1 through 5 respectively. If the minimum escalated dollar DCFROR is 20%, should the company keep and develop the property or sell if there is considered to be a 60^ probability of development generating the year 1 through 5 positive cash flow, and 40% probability of failure generating zero cash flow in years 1 through 5? What development probability of success will make the economics of development a break-even with selling? Please work through excel if possible.
write an apa style paper outlining the effects of financial planning governance and ethical issues in modern economies.
how many brackets should be ordered when WCU places an order with their supplier,
Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.7 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The company has a target debt–equity ratio o..
Further assume that today's required rate of return on these bonds is 5%. How much would these bonds sell for today?
You have $110,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 10 percent and that has only 74 percent of the risk of..
Heald and Swenson Inc purchased a drill press for $850,000 one year and nine months ago. The asset has a six year life and has been depreciated according to the following accelerated schedule. The press was just sold for $475000. The firm's marginal ..
What is the NPV of the investment opportunity? The NPV of the investment is $ ? nothing
Use a two-period FCFF model to estimate the stock's intrinsic value.
Kolby Corp. is comparing two different capital structures. Plan I would result in 900 shares of stock and $65,700 in debt. Plan II would result in 1,900 shares of stock and $29,200 in debt. The interest rate on the debt is 10 percent. Assume that EBI..
The dividend for Should I, Inc., is currently $1.95 per share. what is the most you would pay per share?
A producer of designer jeans sells you the company’s entire inventory of blue jeans introduced one year ago. The jeans are all of the same style and you plan to sell them on an Internet site. You have reason to assume the demand curve for the jeans i..
Security F has an expected return of 10 percent and a standard deviation of 26 percent per year. Security G has an expected return of 17 percent and a standard deviation of 58 percent per year. We form a portfolio composed of 30 percent of security F..
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