1. Suppose that a firm manufactures coffee machines and sells them for $170 each. The costs incurred during the production and sale of these machines are $566921 plus $59 for each machine produced and sold. How many coffee machines must be sold for the firm to break even?

2. A car company offers a base model that costs $20221 and gets 24 miles per gallon in the city. The company also offers a hybrid model that costs $25376 and gets 43 miles per gallon in the city. If the cost of gas is $2.96 per gallon, how many (city) miles would need to be driven in the hybrid model to make up the difference in cost?

What is the anticipated annual revenue : The Tire Store expects to sell 2,800 sets of tires, plus or minus 3 percent, next year. The estimated sales price is $579, plus or minus 4 percent. What is the anticipated annual revenue under the best case scenario? |

What is the bond-yield-plus-risk premium estimate : The current price of Williams 10 percent coupon price, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,140.00. The firm uses the maximum of the risk premium range. What is the bond-yield-plus-risk premium estimate for .. |

Target debt–equity ratio-what is the company wacc : Tulloch Manufacturing has a target debt–equity ratio of .64. Its cost of equity is 14.6 percent, and its pretax cost of debt is 9.6 percent. If the tax rate is 34 percent, what is the company’s WACC? (Do not round intermediate calculations and enter .. |

What stock price would you consider appropriate : The Spring Flower Co. has earnings of $2.15 per share. The benchmark PE for the company is 12. What stock price would you consider appropriate? What if the benchmark PE were 15? |

How many coffee machines must be sold for firm to break even : Suppose that a firm manufactures coffee machines and sells them for $170 each. The costs incurred during the production and sale of these machines are $566921 plus $59 for each machine produced and sold. How many coffee machines must be sold for the .. |

Calculate the depreciation tax shield for project in year : Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category... |

About the salvage value after tax : Your firm needs a computerized machine tool lathe which costs $53,000 and requires $12,300 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. If the lathe can be sold for $5,300 at the end of year 3, wh.. |

Pitfalls in evaluating risky projects : According to the article "Pitfalls in Evaluating Risky Projects" by James E. Hodder, What are the three pitfalls that can be encountered when the DCF methodis used to make decisions? |

What would be the effective cost of the bank loan : Adams Manufacturing Inc. buys $10.3 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. What would be the nomin.. |

## Calculate the possible arbitrage profitsCalculate the possible arbitrage profits given the following environment. Make sure you show all calculations and explain the steps needed to realize the profit. |

## Apple stock has an average returnApple stock has an average return of 12% and a beta of 1.1. Google stock has an average return of 14% and a beta of 1.2. The risk free rate is 5% and the expected return on the market is 10%. If you can only pick one stock to buy, which one would you.. |

## Property taxes-fire insurance and all other annual costsMr. Sam K. Jones, a successful businessman, is considering erecting a small building on a commercial lot. A local furniture company is willing to lease the building for $9000 per year, paid at the end of each year. It is a net lease, which means the .. |

## What is the return from this investmentA parent decides to buy a two bedroom condo for $65,000 by putting 10% down and financing the rest for 15 years at an annual rate of 3.5%. What is the monthly payment? One bedroom is rented out to a roommate for $400 a month (payment received at the .. |

## Planning to open stall at the local mallJudy Garland is planning to open a stall at the local mall, paying $2500 rent, in advance each month. She will buy $25,000 in costume jewelry as the initial inventory, and buy the display cases for $4000. Assume that all the cash flows occur at the e.. |

## Example of a global strategyA country barters the surplus coffee beans it grows for other agricultural products grown in a neighboring country. There is no exchange of currency between these countries. The type of business arrangement between the two countries can be regarded a.. |

## Disadvantages of beginning to draw social securityRelating Present Value to real life, discuss advantages and disadvantages of beginning to draw Social Security Benefits at age 62 vs. waiting to begin drawing them at full retirement age (let's assume 67). |

## What is the effective cost of borrowing in caseYour firm has an average collection period of 29 days. Current practice is to factor all receivables immediately at a 1.25 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely |

## What is the present value of the car paymentsThe car dealership offers you no money down on a car. You may pay for the car in 4 equal annual end of the year payments of 10,352 each, with the first payment to be made one year from today. If the discount rate is 9.99 percent compounded annually w.. |

## Considering two investments-conventional-fdic insuredYou are considering two investments, a conventional, FDIC insured 1-year bank CD with an interest rate of 5% and a 1-year “Inflation Plus” CD offering 1.5% plus the rate of inflation, which is also FDIC insured. Which investment is safer? If you expe.. |

## What is the contribution to asset base of under Base IIIWhat is the contribution to the asset base of the following items under the Basel III requirements? |

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