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Question: Your firm's geologists have discovered a small oil field in New York's Westchester County. The field is forecasted to produce a cash flow of C1 = $2 million in the first year. You estimate that you could earn an expected return of r = 12% from investing in stocks with a similar degree of risk to your oil field. Therefore, 12% is the opportunity cost of capital.
What is the present value? The answer, of course, depends on what happens to the cash flows after the first year. Calculate present value for the following cases:
a. The cash flows are forecasted to continue forever, with no expected growth or decline.
b. The cash flows are forecasted to continue for 20 years only, with no expected growth or decline during that period.
c. The cash flows are forecasted to continue forever, increasing by 3% per year because of inflation.
d. The cash flows are forecasted to continue for 20 years only, increasing by 3% per year because of inflation.
Current price: 101Coupon: 4.0%Corporate Tax Rate: 35%Given the above information please calculate the WACC. (Compute weighted average of debt then WACC.) Weighted average cost of capital
Given the following cost function, estimate the level of output at which the cost function is minimized, and the level of the costs.
Describe the risks that a potential multinational corporation may no longer face as it ceases to be a domestic corporation. Discuss total and unique risks for a potential multinational corporation.
It may surprise you that there are cash flows associated with holding a job. Construct a simple cash flow statement and payback calculation for when your job expenses will be covered for employment you currently have or have had in the past. Incl..
The marginal product of labor at plant 2 is MP2 = 2000 - L2 where L2 is the number of workers employed in plant 2. Given that you have 1,000 workers, what is the best allocation of workers between the two plants?
Corporations are constantly making business decisions based on accepting a certain level of risk. Discuss and explain a situation where a company has accepted a certain degree of risk.
drive-in donrsquos fast food restaurant sells the most delicious burgers in town at the most affordable price.
What coupon rate is being paid on debt for a firm with an after-tax cost of debt of 7.5% and a tax rate of 40%?
as a financial consultant you have contracted with wheel industries to evaluate their procedures involving the
For the remainder of the company's life, dividends are expected to grow at a constant rate, and investors are expected to require a 16 percent return to invest in Ocala's stock. What should be the value of Ocala's stock five years from now?
Gerry, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $220,000. The respective future cash inflows from this 4 year project for years 1 through 4 are: $50,000, $60,000, $70,000, and 80,000 respectively. Ger..
What does the cost of goods sold and gross profit mean? How much gross profit do I make on each hat? Why show both gross profit and net income?
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