Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,610,000. The fixed asset falls into the three-year MACRS class (MACRS Table). Assume that the tax rate is 40 percent and the requi..
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W.C. Cycling had $55,000 in cash at year end 2010 and $25,000 in cash at year end in 2011. The firm invested in property, plant, and equipment totaling $250,000. Cash flow from financing totaled +$170,000. What was the cash flow from operating activi..
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You are building a pipeline which will generate its first annual cash flow of $2m exactly 5 years from today. As it ages, the volume it transports, and hence the cash flows it creates, will decline by 3% per year. Exactly 27 years from today, this pi..
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Siva, Inc., imposes a payback cutoff of three years for its international investment projects. Year 0, 1, 2, 3, 4 Cash Flow (A) -$68,000, $27,000, $36,000, $25,000, $12,000 Cash Flow (B) –$ 78,000, $19,000, $22,000, $34,000, $238,000. What is the pay..
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Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 9%; and if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5, years the yie..
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You have been tasked with evaluating two independent projects: a three-year lathe for the shop and a six-year machine press. Are the two estimates equally reliable? Why or why not?
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Argos Corp. has 9 percent coupon bonds making annual payments with a YTM of 8.5 percent. The current yield on these bonds is 8.85 percent. How many years do these bonds have left until they mature?
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A 20-year bond with a par value of $1,000 has a 9 percent annual coupon. The bond currently sells for $925. If the bond’s yield to maturity remains at its current rate, what will be the price of the bond 10 years from now?
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Skim Milk and Part Whole Milk are identical firms except that Skim is more leveraged than Part Whole. The probability of a recession is equal to the probability of an expansion. If recession occurs, each Firm will have EBIT of $0.5 million next year...
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What is the expected rate of return to equity-holders if the firm has a 35% tax rate, a 10% rate of interest paid on debt, a 15% WACC, and a 60% debt to value ratio?
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You have entered into a long position in the T-note futures of 5 contracts at a price of 125,000. The T-note Futures contract has a face value of $100,000 and trades in % and 32nd of 1%. The initial margin requirement for the contract is $1,430 and t..
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An Open top box must have a volume of 108 in^3. What are the dimensions of the box which uses the least amount of materials?
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