An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $550 at the end of Year 6. If other investments of equal risk earn 10% annually, what is its present value? If other investm..
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You plan to deposit $2,400 per year for 4 years into a money market account with an annual return of 2%. You plan to make your first deposit one year from today. What amount will be in your account at the end of 4 years? Assume that your first withdr..
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What is the nominal and effective cost of trade credit under the credit terms of 4/15, net 30? Assume 365 days in a year for your calculations. Round your answers to two decimal places. Do not round intermediate calculations.
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Golden overseas shipping purchased a new truck two years ago for $129,500. The company uses MACRS depreciation for accounting purposes. The truck is classified as 5-year property, which has depreciation allowances of 20%, 32%, and 19.2% for the first..
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Crosby Industries has a debt-equity ratio of 1.2. Its WACC is 13 percent, and its cost of debt is 4 percent. There is no corporate tax. What is Crosby’s cost of equity capital? What would the cost of equity be if the debt-equity ratio were 2? What wo..
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Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.8 million in anticipation of using it as a warehouse and distribution site, but the comp..
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Dunkin' Donuts joined many other service providers by centralizing manufacturing. Doughnut making in a geographic area is now done centrally for many stores, and the doughnuts are trucked to stores in the early morning. Imagine the decision of the fr..
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In the previous year, a firm had $150 million in sales, $100 million in operating expenses, and $20 million in net income. As of the end of the year the firm had $200 million in total assets and $80 million in total shareholders' equity. Calculate th..
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Delta, Inc., has a times interest earned ratio of 3.0. Based on this ratio, a creditor knows that Delta's EBIT must decline by more than ______ percent before Delta will be unable to cover its interest expense. Show Work.
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You own a portfolio that is 33 percent invested in Stock X, 48 percent in Stock Y, and 19 percent in Stock Z. The expected returns on these three stocks are 9 percent, 12 percent, and 14 percent, respectively. What is the expected return on the portf..
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Kaelea, Inc., has no debt outstanding and a total market value of $74,000. Earnings before interest and taxes, EBIT, are projected to be $8,100 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 21 perce..
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ACE Co. is considering the purchase of two machines. Machine A costs $100,000 with annual cost of $20,000. It will last for 5 years, and have a salvage value of $5,000 at the end of 5 years. Machine B costs $145,000 with annual costs of $17,500, and ..
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