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Fox Enterprises is considering expanding into the growing laser copier business. Fox estimates that this expansion will cost $1.8 million and will generate a 20 year stream of expected net cash flows amounting to $400,000 per year. The company's weighted cost of capital is 15%.
A. Compute the net present value of the laser copier project using the company's weighted cost of capital and the expected cash flows from the project.
B. Using the risk-adjusted discount rate approach, management has decided that this project has substantially more risk than average and has decided that it requires a 24 percent expected rate of return on projects like this. Recompute the risk-adjusted net present value of this project.
Assume that the risk free rate is 4.5% and that the market risk premium is 5.5%. The manager expects to receive an additional $5,000,000 in funds soon.
Martin Software has 10.0 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.8 percent of par.
the real risk-free rate is 2.75%, inflation is expected to be 1.5% this year and 3.75% during the next 2 years. assume that the maturity risk premium is zero. what is the yield on 2-year treasury secutities
You're trying to choose between two different investments, both of which have up-front costs of $45,000. Investment G returns $75,000 in six years. Investment H returns $105,000 in nine years.
Australian Standard for lighting to firstly ensure compliance with the standard and compatibility with current fixtures (T8 linear fluorescent);
Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 7%, and its stock price is $40 per share with 2 million shares outstanding.
Gross revenue last year were $9.9 million, and total costs were $5.0 million. Blaine Company has 1.6 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 6 percent per year.
a) 12% nominal rate, semiannual compounding, discounted back 5 years b. 12% nominal rate, quarterly compounding, discounted back 5 years
A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity. Given the following information, calculate the firm's weighted average cost of capital.
A recent Gallup poll (Poll Analyses May 22, 2002) revealed that 81% of Americans say they have a credit card. You randomly chose 12 Americans and ask if they have at least one credit card.
To fund the purchase, the private equity firm assumes all existing $100 debt at the current 4% interest rate, borrows $100 in new debt with a 12% interest rate, and contributes $20 in equity.
During the year, Belyk Paving Co. had sales of $2,385,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,440,000, $436,500, and $491,500, respectively.
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