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The Sanders Electric Company is evaluating 2 projects for possible inclusion in the firm's capital budget. Project M will require a $37,000 investment while project O"s investment will be $46,000. After-tax cash inflows are estimated follows for the 2 projects:
year project M project O
1 $12,000 $10,0002 $12,000 $10,0003 $12,000 $15,0004 $12,000 $15,0005 $15,000
a. Determine the payback period for each project.b. Calculate the NPV & profitability index for each project based on a 10% cost of capital. Which, if either, of the projects is acceptable?c. Determine the IRR & MIRR for projects M & O.
Baruk Industries has no cash and a debt obligation of $36 million that is now due. The market price of Baruk's assets is $81 million, and the company has no other liabilities.
The SML hold for the company. If a new peoject of the company has the same risk as the overall firm, what is the weighted average cost of capital?
1. Expected return on a project; it is the rate that makes net present value (NPV) break even.
What are the convexities of the 2 portfolios? To what extent does (a) duration and (b) convexity explain the difference between the percentage changes calculated in part c?
Suppose the United State can produce Toyotas at the cost of $18,000 per car and Chevrolets at $16,000 per car. In Japan, the cost of producing Toyotas 1,000,000 yen, and the cost of producing Chevrolets at 500,000 yen.
You anticipate that the economy will grow steadily at a rate of 3.00% per year for the foreseeable future. What is the market required rate of return on your firm's preferred stock?
Cassandra sells property for a sales valueof $150,000. In addition, Lana, the buyer, pays $5,000 in property taxes that had accrued during th year while property was still legally owned through Cassandra.
Does the use of universes of managers with similar investment styles to evaluate relative investment performance overcome the statistical problems associated with instability of beta or total variability?
Let the competitive equilibrium prices be p1 and p2 respectively and derive both consumers' demand functions for both goods.
Assume that Western Exploration Corp. is considering the acquisition of Ogden Drilling Company. The latter has a $510,000 tax loss carryforward. Projected earnings for the Western Exploration Corp. are as follows.
Your expectations from a one year investment in HiTech Computers is as follows and determine the expected return from this investment
Mr. Blochirt is making a college investment fund for his daughter. He will put in $850 per year for the next fifteen years and expects to earn a 8 percent yearly rate of return.
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