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Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $26,200, and the company expects to sell 1,470 per year. The company currently sells 1,970 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,790 units per year. The old board retails for $22,100. Variable costs are 57 percent of sales, depreciation on the equipment to produce the new board will be $1,420,000 per year, and fixed costs are $1,320,000 per year.
If the tax rate is 35 percent, what is the annual OCF for the project? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)
OCF $ _________________
General Electric has just issued a callable (at par) ten-year 8% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $104 and a face value of $104. What ..
Michael's, Inc. just paid $1.85 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 4.10 percent. If you require a rate of return of 8.3 percent, how much are you willing to pa..
Suppose a stock had an initial price of $72 per share, paid a dividend of $1.15 per share during the year, and had an ending share price of $81. Compute the percentage total return.
The Poseidon Swim company produces swim trunks. The average selling price for one of their swim trunks is $38. The variable cost per unit is $25. Poseidon swim has average fixed costs per year of $35,194.
The Red Bud Co. pays a constant dividend of $2.30 a share. The company announced today that it will continue to do this for another 2 years after which time they will discontinue paying dividends permanently. What is one share of this stock worth tod..
You recently completed your undergraduate degree in Business Administration, majoring in Finance, at University of Scranton. You are now working at PPL Corporation, at their corporate headquarters, in Allentown, PA. Your first assignment is to estima..
Bond X is non callable and has 10 years to maturity, a 9% semi annual coupon, and a $1000 par value. Your required return on Bond X is 5%, and if you buy it, you plan to hold it for 3 years. You (and the market) have expectations that in 3 years, the..
Assume that you have been quoted an investment that will pay you $1000 each month for the next 40 years. If you are quoted a 5.00% rate compounded monthly, how much would you value this cash flow? What if the rate was compounded daily? Note: the cash..
Cyclone Software Co. is trying to establish its optimal capital structure. Its current capital structure consists of 30% debt and 70% equity; however, the CEO believes the firm should use more debt. The risk-free rate, rRF, is 6%; the market risk pre..
Suppose that Neilson’s Restaurants has a liability exposure with expected loss payment equal to $3 million this year, $3 million next year, and $1 million in two years. What is the present value of the expected tax shield arising from Neilson’s liabi..
New earnings figures suggest that cash flows will experience a $100 onetime increase because of a new product being brought online.- how much will the stock's value increase?
Accrual income versus cash flow for a period Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso that they must be paid for within 30 days but can be returned for a full refund credit..
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