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Assume that Salisbury Corporation is considering the establishment of a subsidiary in England. The initial investment required by the parent is $40,000,000. If the project is undertaken, Salisbury would terminate the project after four years. Salisbury's cost of capital is 16%, and the project is of the same risk as Salisbury's existing projects. All cash flows generated from the project will be remitted to the parent at the end of each year. Listed below are the estimated cash flows the English subsidiary will generate over the project's lifetime in British pounds (GBP). What is the NPV (in USD) for this project? Year Cash Flows in GBP Exchange Rate ($/GBP) 1 7,500,000 1.45 2 9,000,000 1.49 3 10,800,000 1.51 4 12,960,000 1.53
The risk-free rate is 3.6% and the required return on the market portfolio is 11.8%. A company that has just paid $1.80 per share in annual dividends has a beta of 0.9 and long-term growth rate of 5.2%. The dollar value of this stock is
Calculate the following market multiple ratios for AstraZeneca plc at its 2014 financial year-end: i..EV/EBITDA. ii. Price-to-earnings ratio (PE ratio). iii. Price-to-cash-flow ratio. iv. Contrast and explain the results of the different market mult..
Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $7 per share and has announced that it will increase the dividend by $6 per share for each of the next five years, and then never pay another dividend. If you require ..
Find the current exchange rates online and post the current exchange between the U.S. dollar and any other currency. Briefly describe what has happened over the past year between the two.
Suppose the current stock price is $100. If the stock price increases soon, which action will provide the highest rate of return?
Larvey Co. has an unlevered cost of capital of 10.9 percent, a tax rate of 35 percent, and expected earnings before interest and taxes of $21,800. The company has $25,000 in bonds outstanding that sell at par and have a coupon rate of 6 percent. What..
justo Ltd buys on terms 1.5/10, net 30 days. It does not take discounts, but it typically pays 20 days after the invoice date, instead of waiting until Day30. Justso can borrow from the bank at a rate of 18% per annum. If justso is notaking discounts..
The Jimmer Company has a historical growth in its free cash flows of 4% with little variability. With the addition of a new plant and equipment, however, you expect that free cash flows will grow 2% in year 1, 4% in year 2, 8% in years 3 to 5, and 5%..
Investment E is a new machine tool center which would be used in an expanded assembly line in the company’s manufacturing plant. The tool center will cost $500,000 and is expected to return cash flows of $125,000 per year for five years. The company ..
Would you seek to acquire a company within the European Union or outside of it and describe the advantages and disadvantages of the choice you made - describe the advantages and disadvantages inherent in the option you did not choose.
Corporation has 9.8 million shares of common stock outstanding, 420,000 shares of 5 percent preferred stock outstanding, and 220,000 8.6 percent semiannual bonds outstanding, par value $1,000 each. what rate should the firm use to discount the projec..
Contrast the features of a mutual fund investment with those of retail deposits at commercial banks or other depository institutions. In particular, what are their differences in risk and return? Why do you think the Great Depression led the retail p..
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