Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $4,500 apiece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $44,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $5,200 each. If your cost of capital is 10 percent and your firm faces a 40 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)

Higher concentration ratios imply higher correlation : Bank’s primary reserves are short-term assets that can provide the bank with additional liquidity while safely earning some interest income. Value at Risk (VAR) is a common approach to assessing risk in financial firms’ trading accounts. Higher conce.. |

Compute the expected share price-perpetual growth method : Suppose the dividends for the Seger Corporation over the past six years were $1.36, $1.44, $1.53, $1.61, $1.71, and $1.76, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. |

What are the monthly-nominal and effective interest rates : BMW is offering a 1-Series for $18,588. This can be financed with a down payment of $2,008.80 and $249 per month for 72 months. What are the monthly, nominal, and effective interest rates for this purchase? |

Working capital represents firms investment in assets : Derivatives are claims whose value is derived based on what happens to another underlying asset. As a general rule, the required return of common stocks is higher than the YTM of bonds issued by the same company. Working capital represents a firm’s i.. |

Expected yearly before-tax cash savings due to acquiring : Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $4,500 apiece and which you could probably use for another 2 years .. |

Evaluate the proposed acquisition of a new special : You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $20,900. The firm’s marginal .. |

Medical insurance : You have medical insurance for your family with a $250 deductible, 20% coinsurance, and $1,500 OOP maximum for each individual and $3,000 family OOP maximum. Calculate your OOP costs if three people in your family each incur $6,000 in medical costs. |

What is the amount of the lease-equivalent loan : Riverton Mining plans to purchase or lease $435,000 worth of excavation equipment. If purchased, the equipment will be depreciated on a straight-line basis over five years, after which it will be worthless. If Riverton purchases the equipment, what i.. |

## What exchange rate would the law of price hold shipping costThe current spot exchange rate is 109.43 (in Yen). A particular commodity sells for $5,000 in the Unites Sates and 600,000 (in Yen) in Japan. Does the law of one price hold? If not explain how to profit through arbitrage. Taking the commodity prices .. |

## Compute post-stock dividend price of complex computers stockShow the company's common stockholders' equity after the stock dividend. Calculate the post-stock dividend price of Complex Computers stock, assuming no other changes occur. |

## Debt will be used to repurchase shares of stockYou currently own 600 shares of JKL, Inc. JKL is an all equity firm that has 75,000 shares of stock outstanding at a market price of $40 a share. The company's earnings before interest and taxes are $140,000. JKL has decided to issue $1 million of de.. |

## Present value of a perpetuityPresent value of a perpetuity. What is the present value of a $400 perpetuity if the interest rate is 6%? Round your answer to the nearest cent. |

## Determine the measures for 2012Determine the measures for 2012, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Assume 365 days a year. |

## Calculate the internal rate of return for projectYou are considering a an investment in a project with a life of eight years, an initial outlay of $120,000, and annual after-tax cash flow of $52,000. Calculate the payback period for this project assuming cash flows are evenly distributed across the.. |

## What level of sales would generate in net incomeThe CEO would like to see higher sales and forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 5% of sales and that depreciation and amortization and interest expenses will increase by 10%. T.. |

## Finding the required interest rateYour parents will retire in 25 years. They currently have $300,000, and they think they will need $1,100,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? |

## What is the net present value of this expansion projectThe Lunch Counter is expanding and expects operating cash flows of $32,500 a year for seven years as a result. This expansion requires $28,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project req.. |

## Disadvantage of partnership form of business organizationEach of the following is a disadvantage of the partnership form of business organization EXCEPT |

## Compute the expected share priceSuppose the dividends for the Seger Corporation over the past six years were $1.02, $1.10, $1.19, $1.27, $1.37, and $1.42, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk pre.. |

## The trade-off theory of capital structureDescribe and explain in 2-3 pages the trade- off theory of capital structure. How is it related to the use of debt instead of stock (equity financing) in order to raise capital? |

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