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The Shoe Store has decided to sell a new line of shoes that will have a selling price of $79 and a variable cost of $38 per pair. The company spent $187,000 for a marketing study that determined the company should sell 112,000 pairs per year for five years. The marketing study also determined that the company will lose sales of 28,000 pairs of its high-priced shoes that sell for $109 and have variable costs of $54 a pair. The company will also increase sales of its in expensiveshoes by 39,000pairs. The inexpensive shoes sell for $39 and have variable costs of $24 per pair. The fixed costs each year will be $2.84 million. The company has also spent $1.29 million on research and development for the new shoes. The plant and equipment required will cost $18.6 million and will be depreciated on a straight-line basis over the life of the project. The new shoes will also require an increase in net working capital of $847,000 that will be returned at the end of the project. The tax rate is 34 percent, and the cost of capital is 12 percent. What is the IRR for the new line of shoes?
-18.33 percent
17.82 percent
16.62 percent
16.11 percent
-13.49 percent
Brigham Jewellery Corporatio9n common stock has a beta, B, of 1.8. The risk free rate is 5%, and the market return is 16%. Determine the risk premium on Brigham common stock should provide. Determine the required return that Brigham common stock shou..
The internal rate of return:
What is the price of a 9-month call option AND a 9-month put option BOTH with a strike price of $45 given the Black-Scholes Option Pricing Model and the following information? Stock Price = $48 Strike Price = $45 Time to expiration = .75 Risk-free ra..
Moon, Co. is currently trading at $22.00 per share. The company is paying a regular cash dividend of $0.30 per share, and an extra dividend of $0.05 per share. Tomorrow is the ex-dividend day. Assuming there is no new information released about the c..
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Hager’s management is new to the merger game, so Zona has been asked to answer some basic questions about mergers as well as to perform the merger analysis. Among the more prominent are (1) tax considerations, (2) risk reduction, (3) control, (4) pur..
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A friend of yours wants to start saving for his anticipated retirement and make equal annual deposits into his retirement account. He intends to retire in 30 years and believes he will need to withdraw funds while retired for 20 years. If he starts m..
A stock is priced at $38.24 a share and has a market rate of return of 9.65 percent. What is the dividend growth rate if the company plans to pay an annual dividend of $.48 a share next year? 7.42 percent 2.23 percent 8.39 percent 1.26 percent 7.60 p..
What factors did PepsiCo likely consider in deriving its required rate of return on the project in Brazil? Describe the uncertainty that surrounds the estimate of future cash flows from the perspective of the US parent.
Use the data below from a company 's sales for January to April to get a forecast for the collection forecast, including cash sales, for April: Month Sales. Of the sales above, 30% are for cash and 70% are for credit. Of the credit sales, 58% are col..
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