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Collect the annual income statement of any company you know well for last four fiscal years. The selected company must be in process of expanding its business and plan to invest in new investment project. As a newly hired MBA in the capital budgeting division, you have bem asked to evaluate a new project using the Weighted Average Cost of Capital (WACC), Adjusted Present Value (APV), and Flow to Equity (FTE) methods. You will need to compute the appropriate cost of capital and the net present values with each method. Because this is the first assignment with the company, they want you to demonstrate your ability to apply the different methods of project evaluation. You must seek required information necessary to determine the free cash flows. Create spreadsheet in Excel to do all your calculations.A)Determine the WACC for the company. Compute the NPV of the new project based on the free cash flows you calculated using WACC?
B)Determin the NPV using the APV and FTE method. In both cases , assume the company maintained the target leverage ratio you computed in WACC?
C)Compare the results under the three methods and explain how the resulting NPV’s are achieved under each three different methods?
Bay-Mart expects to have a net capital expenditure of $300 million and an increase in non-cash working capital of $30 million. The firm has a debt-to-capital ratio of 40%.
Increasing the promotional budget for a product in order to increase awareness is not advisable in the short run under which of the following circumstances?
Romeo & Juliette are competitors in selling college finance textbooks. The separate capital structures of each corporation are as follows:
Mr. Crockrill purchased the bonds to yield 12%. How much did Mr. Crockrill pay for the bonds?
Discounting refers to the process of bringing the future back to the present and determine the current market prices of the following $1,000 bonds if the comparable rate is 10% and answer the following questions.
Avicorp has a $10.3 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years.
on 30 january 2002 you bought one share of abc for 80. on 30 january 2003 the stock split 2 for 1. on 31st july 2003
What is the expected dividend payout ratio if the company follows a residual dividend policy? 1. 50% 2. 40% 3. 20% 4. 25% 5. none of the above
Gardial & Son has an ROA of 12%, a 5% profit margin, and a return on equity of 2-%. What is the company's total assets turnover? What is the firm's equity multiplier?
Annual maintenance costs associated with ownership are estimated at $240,000 but this cost would be borne by the lessor if it leases. What is the net advantage to leasing(NAL), in thousands?
Computation of the future contracts and the margin money and how much money will be required for margin account
What is the cross rate between the yen and the peso; that is, how many yen would you receive for every peso exchanged? Round your answer to two decimal places.
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