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Assume NEWC has an investment opportunity (similar to the air bag opportunity in Other People's Money).The firm can spend $325 Million on refurbishing its wire and cable plant to develop a product that will be sold in packets or units of twenty. Assume the firm forecasts this product to have the same profit margin (NI available to common stock/sales) as the other products in its product portfolio: ($8.52 per 1,000 individual units) and that margin WACC is 11% for this risk class project product. If the firm's sells the same number of units or packets every year for the next twenty years, how many packets (or units) must be sold each year for this to be zero-NPV project?
1- Assume CF equals net income available to common stockholders plus depreciation. You may assume depreciation is 45,500 per year. Ignore taxes and ignore changes in net operating working capital, along with salvage value of the equipment used in the production process. You should also ignore any potential tax consequences of salvage value. You should use only the information provided and assume it is complete. Hint: CF must be an annuity (annuity of money) or there are hundreds of answers to this question.
2- How would you decide whether (or not) to proceed with this project from a shareholder wealth maximizing perspective? Explain your rationale. What further information if any would you want to have or to know? 2-3 sentences
Using the constant growth rate model (and data from Bloomberg) shows that the present value of expected dividends for the next five years for McDonald’s is only about $1.98. How can such a large discrepancy in the two dollar values on the same date ..
What problems does Danny Stein face either e Music? What possible solutions exist to the problems identified in question one. What would be some recommendations to solve the problems?
A newly issued 20-year, $1,000, zero coupon bond just sold for $311.05. What is the implicit interest, in dollars, for the first year of the bond's life?
In addition, you may wish to seek out further information through your own research. When you have reviewed the advice and the plans, please prepare a short (2-3 page) paper discussing:
The CAPM does not require investors have homogeneous expectations, but rather that they have:
If a portfolio had a return of 15%, the risk-free asset return was 5%, and the standard deviation of the portfolio's excess returns was 30%, the Sharpe measure would be ______ .
getting better as the series winds down. kevin connolly directs the episode as we move forward with the storylines.
Use Runge-Kutta method to answer the solution.
Firm XYZ has operating profits of $90,000, taxes of $15,000, interest expense of $30,000, and preferred stock dividends of $5,000. What was the firm's net profit after tax?
Burke Tires just paid a dividend of D0 = $1.50. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the..
Gomez runs a small pottery firm. He hires one helper at $15,500 per year, pays annual rent of $5,500 for his shop, and spends $21,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) t..
Maverick Milling Co. just paid a dividend of $1.00 to its shareholders. The firm is expecting high growth over the next few years and is projecting the dividend to grow by 15% in the first year, 20% in the second year, and $15% in the third year, bef..
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