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Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $135,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $590,000 per year. The fixed costs associated with this will be $194,000 per year, and variable costs will amount to 20 percent of sales. The equipment necessary for production of the Potato Pet will cost $650,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy’s is in a 30 percent tax bracket and has a required return of 12 percent. Required: Calculate the Time 0 cash flow for this project. (Do not round intermediate calculations. Enter a negative sign when necessary. Round your answer to the nearest whole number (e.g., 32).) Time 0 cash flow = -650,000 Calculate the annual OCF for this project. (Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).) OCF = ? Calculate the payback period for this project. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Payback period = ? Calculate the NPV for this project. (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) NPV = ? Calculate the IRR for this project. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) IRR = ?
Stan elects to receive his retirement benefit over 10 years at the rate of 2000 per month beginning one month from now. The monthly benefit increases by 5% each year. At an annual nominal interest rate of 6% compounded monthly, calculate the present ..
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long term government and corporate bond, and the third is a T-bill money market fund that yields a sure rate of 4.8. The correlation between the fund..
Titan Mining Corporation has 9 million shares of common stock outstanding, ½ million shares of preferred stock paying $7 dividends and 120,000 8.5% semiannual bonds outstanding , par value $1000 each. The market risk premium is 10%, T-bills are yield..
Assume a particular stock has an annual standard deviation of 35 percent. What is the standard deviation for a three-month period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign ..
You deposit $8,000 into a retirement account at the end of the next 12 years earning 10% interest, what is the future value of your retirement after 12 years?
Assume you have been asked by an investor, age 35, who wishes to invest in conservative stocks that will provide some income now but is mainly interested in growth over the next ten(10) years. Begin your final project essay with an investment recomme..
Consider two call options on the same underlying stock and same expiration date. You buy the call with x= 40, and sell call with x=50. What is the any off from your position if the stock price ends at $32? What is the highest payoff from this positio..
From your forecasts of starbucks' financial statements for years +1 through +5, derive the projected dividends using the projected amounts for the plug to dividends minus the net amounts of common stock issued each year (if any). Then compute project..
A Answer option has a zero intrinsic value; that is, for a call option, the underlying asset price is below the strike price. or for a put option, the underlying asset price is above the strike price.
Clumsy Corp. is planning to issue new 30-year bonds. Initially, the plan was to make the bonds non-callable. If the bonds were made callable after 10 years at a 10% call premium, how would this affect their required rate of return?
Municipal general obligation bonds are ____. Municipal revenue bonds are ____. Some bonds are "stripped," which means that. Leveraged buyouts are commonly financed by the issuance of:
Calculate the six month GAP associated with this transaction. What does this GAP measure indicate about interest rate risk in this transaction? Calculate the three month GAP associated with this transaction. Is this a better GAP measure of the bank's..
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