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A Company is considering two alternative methods of producing a new product. The relevant data concerning the alternatives are presented below. Alternative I Alternative II Initial Investment $50,000 $110,000 Annual receipts $36,000 $50,000 Annual Disbursements $16,000 $10,000 Annual depreciation $12,000 $16,000 Expected Life 5 years 7 years Salvage Value $0 $0 At the end of the useful life of whatever equipment is chosen the product will be discontinued. The company's tax rate is 50 percent, and its cost of capital is 11 percent. Calculate the internal rate of return for each alternative.
There is no change expected in the other working capital components. The discount rate is 8% and What is the NPV of the project?
XYZ, Inc. has an offer to buy ABC & Sons. XYZ thinks ABC can produce cash flows of $5k, $9k, & $15k over the next three years (respectively).
QUESTIONS: 1. According to a recent poll, what percentage of American households have less than $25,000 saved for retirement in 2012? What was this percentage in 2008?
The president of ABC made this statement in the company's yearly report: "ABC's primary goal is to increase the value of our common stockholders' equity." Later in the report, the following announcements were made:
Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended.
Chamberlain Canadian Imports has agreed to buy 15,000 cases of Canadian beer for four million Canadian dollars at today's spot rate. The firm's financial manager, James Churchill, has noted the following current spot and forward rates:
What are some methods to create a portfolio with the expected risk free rate of return? Think of putting two stocks into a portfolio.
The Six-month U.S. dollar LIBOR is currently 4.375%; your firm issued floating-rate notes indexed to six-month U.S. dollar LIBOR plus 50 basis points. What is the amount of the next semi-annual coupon payment per U.S. $1,000 of face value?
Evaluate how much has to be in your account before the first withdrawal at age 67 and evaluate how much would have to save annually between now and age 67 in order to finance
Find the bond's price today and six months from now after the next coupon is paid
Use the U.S. Rule to determine total interest. (Do not round intermediate calculations. Round your answers to two decimal places. Omit the "tiny_mce_markerquot; sign in your response.)
Computation of value of the bond and What is the total interest expense recorded on these bonds over the fifteen years if the market rate of interest
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