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The HTT Company is considering a new product. The new product has a five-year life. Sales and net income after taxes for the new product are estimated in the following table:
The equipment to produce the new product costs $500,000. The $500,000 would be borrowed at a risk-free interest rate of 14 percent. However, the machine adds only $300,000 to the firm's debt capacity in years 1, 2, and 3, and only $200,000 in years 4 and 5. Although net income includes the depreciation deduction, it does not include the interest deduction (that is, it assumes that the equipment is financed with equity). The equipment can be depreciated on a straight-line basis over a five-year life at $100,000 per year. The equipment is expected to be sold for $100,000 in five years. Net working capital (NWC) required to support the new product is estimated to be equal to 10 percent of net sales of the new product. The NWC will be needed at the start of the year. This means that if sales were $1 in year 1, the NWC needed to support this one dollar of sales would be committed at the beginning of year 1. The company's discount rate for the unlevered cash flows associated with this new product is 18 percent and the tax rate is 40 percent. What is the net present value of this project?
Using the payback method, what will the decision be.
How strong is the relation between IPOs and shareholder rights? - Are there exceptions to the usual relation? What might explain these exceptions?
Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has falle..
Leaders derive the ability to influence based on position or personal traits (e.g. charismatic) and the relationship between the follower and leader (Northouse, 2013). So, thinking about the relational aspect, does your answer change any?
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14 percent with a volatility of 20 percent. Currently, the risk-free rate of interest is 3.8 percent.
Describe the resolution process
An investor was considering purchasing Treasury bonds. Five-year bonds had a 3% yield and 2-year bonds had 2% yield. The investor chose the 5-year bond at a par price for a 3% yield.
Discuss thoroughly the process and analyses that one must go through in order to make a sound and analytical RE investment decision. You must discuss these with specific references to the steps involved in your group project.(Length: open)
Need help on writing this short essay about if the pre modern women can achieve good life, with the support of ideas of ancient philosophies.
Two years from now, the required return on the same bond is 8 percent. What is the coupon rate on the bond now? The YTM?
Suppose the maturities of the two bonds are extended to 10 years. What will be the prices of the two bonds given a required yield of 8 percent?
Dr. Kim wants to conduct a study on memory in nursing home residents. He contacts local nursing homes and selects 50 residents from their resident lists to participate in his study.
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