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1. You are evaluating a project for your company. You estimate the sales price to be $500 per unit and sales volume to be 2000 units in year 1; 3000 units in year 2; and 1500 units in year 3. The project has a three-year life. Variable costs amount to $300 per unit and fixed costs are $200,000 per year. The project requires an initial investment of $325,000 in assets that will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $50,000. NWC requirements at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 34 percent and the required return on the project is 12 percent. What is the operating cash flow for the project in year 2?
A. $74,167
B. $192,500
C. $300,833
D. $374,500
2. A firm is considering a new project that will generate cash revenue of $1,500,000 and cash expenses of $600,000per year for five years. The equipment necessary for the project will cost $275,000 and will be depreciated straight line over four years. What is the expected free cash flow in the second year of the project if the? firm's marginal tax rate is 35?%?
A. $609,063
B. $730,876
C. $540,313
D. $548,157
The next dividend payment by Halestorm, Inc., will be $4.77 per share. The dividends are anticipated to maintain a growth rate of 2 percent forever. If the stock currently sells for $4.3 per share, what is the expected capital gains yield?
It is January 30. You are managing a bond portfolio worth $6 million. - How should you hedge against changes in interest rates over the next 6 months?
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An injection molding machine can be purchased and installed for $90,000. It is expected to be kept in service for eight years. It is believed that $10,000 can be obtained when the machine is disposed of the at the end of year eight. What are the depr..
Evil Pop, Inc., has an average collection period of 70 days. Its average daily investment in receivables is $45,300. Assume 365 days per year. What is the receivables turnover? (Do not round intermediate calculations and round your answer to 4 decima..
Cash dividends are paid out of. Which of the following is responsible for seeing that the best possible financial analysis is presented? The treasurer of a corporation usually reports to the CFO of the firm?
A project has a required payback period of three years. Which one of the following statements is correct concerning the payback analysis of this project?
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