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Question
a) Dolphin Industries is closing down an outmoded factory which will make all the workers redundant. Dolphin's CEO is enraged to learn that the firm must continue to pay for workers' health insurance for 4 years. The cost per worker next year will be £2,400. The inflation rate is expected to be 4% per year and the health costs are expected to increase 3 percentage points faster than inflation. The nominal discount rate is 10%. What is the present value of this obligation?
b) A regional supermarket chain is deciding whether to install a fully automated bakery in each of its stores. Each bakery will cost £25,000 to install. Projected income per bakery is as follows
Why would the store continue to operate the bakery in years 4 and 5 if it produces no profits? What are the cash flows from investing in bakery? Assume each bakery is completely depreciated and has no salvage value at the end of its 5-year life.
c) A 6 year government bond (with a face value of £100) makes annual coupon payments of 5% and offers a yield to maturity of 3% annually compounded. Suppose that one year from now the bond still yields 3%. If you buy the bond today and sell it after one year, what is the return on your investment over the 12 month period?
Evaluate what is the difference in their savings account balances at the end of thirty years?
Based on the above information, what is the F-200's expected net present value and what is the estimated value of the abandonment option?
what factors in calvin's situation should be taken into consideration in the fund selection process? how might these affect Calvin's course of action?
Discuss and explain about an appropriate promotions strategy for the groups listed above. In doing so compare & contrast two (2) promotions strategies.
We are buying a 28-day Treasury bill, during a normal year, & want to determine both discount rate & the investment rate. If we buy the bill for $998,
Net Present Value, and internal Rate of Return, should Sally undertake this project - Annual fixed costs are projected at $140,000 per year and variable costs are projected at 50% of sales.
Select the incremental cash flows from the options - relevant incremental cash flows for a project that you are currently considering investing
The market value of the car isexpected to depreciate 48% in four years. What is the break-even lease payment? Assumetaxes are irrelevant to this problem
How is the cost of debt determined? Does the cost of debt differ if the company is privately traded as opposed to publicly traded?
Summer Tyme, Corporation is planning a new three year expansion project that needs an initial fixed asset investment of 2.754 million dollar. The fixed asset will be depreciated through straight-line method.
Describe how the CAPM assists in calculating the weighted average costs of capital and its components
Are markets like the NYSE, NASDAQ, and CME fair markets explain your answer and also compare a real estate investment in Baghdad with a same investment in Chicago.
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