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Your real-estate company is considering buying a $5 million dollar hotel. The company already pays taxes at the highest scale. The hotel is expected to earn $20 million dollars (in today’s dollars) every year and have expenses of $17 million dollars (in today’s dollars) which should decrease 5% per year. The company will borrow the money at 10% interest rate compounded monthly for 30 years. Both the interests and the depreciation (according to MACRS) need to be accounted for when computing the taxable income. Inflation is expected to be 3% and the company’s MARR is 18%. Using an after tax ROR analysis, is this a good investment for the company? Use Excel to solve this problem. (Note: today’s dollars is another way of saying constant dollars with today as a base year.)
Bond J is a 8 percent coupon bond. Bond K is a 12 percent coupon bond. Both bonds have 12 years to maturity and have a YTM of 9.5 percent. If interest rates suddenly rise by 1 percent, what is the percentage price change of these bonds?
The cash flows relevant for a foreign investment should, from the parent company's perspective, include the financial cash flows that the subsidiary can legally send back to the parent company plus the cash flows that must remain in the foreign count..
What is Consolidation? Explain the steps to do Consolidation. What are Cross Validation Rules and Security Rules ? Explain the Inter-Org Transfer process. Explain the different types and pre-requisites
Discuss with your group your recommendations and best practises for utilising BSCs in general. Note the various formats that may be used across examples, and discuss any advantages you may see to one style of presentation over another.
Does the efficient market hypothesis imply that stock market returns are unpredictable across time? If not, which variable(s) may be used to forecast stock market returns? Does time-series stock market return predictability imply an arbitrage opportu..
Huron Manufacturing plans to pay a dividend of $5 per share. The growth rate is 7 percent and the discount rate is 12 percent. What is the present value of growth opportunities (PVGO)?
Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semi annual interest payments. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6..
A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $1,200 per month for the next three years and then $2,400 per month for two years after that. If the bank is charging customers 8.00 percent APR, ..
Sow Tire, Inc., has sales of $1,442,000 and cost of goods sold of $1,242,000. The firm had a beginning inventory of $96,200 and an ending inventory of $78,000. What is the length of the days’ sales in inventory?
Suppose a firm does not pay a dividend but repurchases stock using $28 million of cash, the market value of the firm decreases by ________. A firm has $300 million of assets that includes $40 million of cash and 10 million shares outstanding. If the ..
Jessica deposits 8000 into fund A that earns a nominal rte of 4% convertible quarterly. At the end of each quarter for 5 years, Jessica withdraws 400 from A and deposits into fund B that earns a nominal interest rate of 5.5% convertible quarterly. Im..
Cost of Common Equity Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 11%, and its tax rate is 40%. Pearson's CFO estimates that the..
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