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A manufacturer is considering venturing into the golf club manufacturing business with a new driver golf club. Your job is to determine if the company should create this new driver golf club or not. Regarding the costs at t=0 (today), the machinery to create the golf club would cost $2,000,000. It would cost $50,000 to install the machinery and inventories would increase by $100,000. The machinery is expected to last ten years and would be depreciated with straight-line depreciation. The project is expected to last ten years when the project would be ended. The project's cash inflows are expected at begin at t=1 (that is, year 1) and continue through t=10 (year 10). At t=10, the machinery is anticipated to have a salvage value of $40,000. The company expects to sell 500 golf clubs per year at an anticipated price of $500 per golf club. Operating costs, excluding depreciation, are anticipated to be 75% of sales each year. The project's cost of capital is 12% and the firm's tax rate is 35%. Determine the project's cash flows for years t=0 to t=10. Please use Excel to estimate the project's cash flows.
If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Because the two divisions are the same size, the company has composite of WACC of 11%. Division B is considering a new project with an expected return of 12%.
What do you think will be results on employment of using this new target for monetary policy.
Find a new possible investment item for Lockheed Martin, what problems are you going to have in estimating the cash flow that might be emanating from the initial investment and problems in getting it funded?
you would like to buy a boat and know you can afford boat payments of 225 a month for 5 years. the interest rate is
On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places.
using the same company bank of america that you have using in previous weeks please review its cashflow sheet the
However, with the warrants attached the bonds will pay a 6% annual coupon and can still be issued at the par value of $1,000. There are 30 warrants attached to each bond. What is the value of each warrant?
Stone Sour Corp. issued 15-year bonds 2 years ago at a coupon rate of 7.90 percent. The bonds make semiannual payments. If these bonds currently sell for 109 percent of par value, what is the YTM?
On April 14, 1994, Bill Shaw, retired policeman, offered to sell Thurgood his 1965 Mustang convertible for= $1,000.
Primetime Company owns 2/3 of the outstanding $1 par common stock of Satellite corporation on January 1, 2006. In order to increase cash to finance an expansion program,
Lexicon Corporation purchased a patent for $600,000 on January 2, 2001, at which time the patent had an estimated useful life of ten years.
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