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Evaluate a project that costs $1.75 million has a 10-year life and no salvage value. Assume depreciation is straight line over the life of the project. Sales are projected at 155K units every year over the life of the project. Price per unit is $85, variable costs are $50 per unit, and fixed costs are $1,250,000 per year. The tax rate is 30% and the required rate of return is 15% after tax. Calculate: the accounting break-even point; the operating leverage at this break-even point; the base-case cash flow and its NPV. Also compute the impact of a 10% decrease in expected sales.
Alpha Company is paying a $1.50 per share dividend today. There are 200,000 shares outstanding with a par value of $1 per share. As a result of this dividend, the:
What are the economic functions that financial intermediaries perform that benefit society? In your answer, discuss the relationship of financial intermediaries and financial markets to the savings-investment process within an economy and to each oth..
You can find this information in the following sources: "Wall Street Journal," "New York Times," Yahoo Finance, Bloomberg, and company web sites. The company web site will often provide you with the latest fiscal reports in the "investor relations" s..
Thornley Machines is considering a 3-year project with an initial cost of $1,050,000. The project will not directly produce any sales but will reduce operating costs by $600,000 a year. The equipment is depreciated straight-line to a zero book value ..
What is the effect on break-even level of revenues for each dollar of increase in fixed costs plus depreciation for a firm with 70% variable costs?
Elsee, Inc., has net sales of $10 million, and 75 percent of these are credit sales. Its cost of goods sold is 65 percent of annual net sales. The firm’s cash conversion cycle is 32.0 days. The inventory balance at the firm is $1,543,000, while its a..
Process the required reversing entries via the general journal - Post the journal entries to the appropriate ledger accounts and prepare a bank reconciliation as at 31st July 2014.
The old maxim De Gustibus Non Est Disputandum essentially means that preferences are entirely subjective, and should not be disputed. Consumers like what they like. Do you agree with this? Specifically, either support or argue against the notion that..
Dye Trucking raised $200 million in new debt and used this to buy back stock. After the recap, Dye's stock price is $6.25. If Dye had 60 million shares of stock before the recap, how many shares does it have after the recap?
The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of t..
Andrusco Corp's new vice president of Finance, Mr Rufus, has discovered that a production machine authorized for purchase last year y his fired predecessor Mr. Miranda, is not functioning well on the production floor. Therefore he has decided and rec..
TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $2,200,000 and there are 155,000 shares outstanding. If the benchmark price-sales ratio for the company is 4.6, how much will you pay for the stock? If the..
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