Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Your company, Home Maintenance, Inc., has decided to expand into lawn care. The expansion will involve the purchase of a truck, trailer, mowers, edgers and other miscellaneous equipment costing approximately $70,000. This equipment will have no salvage value at the end of three years. They will be depreciated on a straight-line basis over 3 years. The average price per lawn is $50, and you expect to be able to do 300 lawns per week, for 20 weeks of the year. You expect to do the same number of lawns each year. You will have three employees whom you will have to pay $9 each, or $27 total, per lawn. The cost of gas and oil is approximately $4 per lawn. You will spend some of your own additional time managing the business, and value this time at $16,000 per year. You estimate that you will need approximately $2,500 in working capital immediately, which you will get back at the end of the project. You paid $3,000 last year for a business plan and permit for the lawn service. Your company is financed entirely with equity. Assume the appropriate cost of capital for the project is 15%.
a) Prepare pro-forma income statements for the three years.
b) Determine whether you should you open this business.
An investment banking firm has estimated the following after-tax cost of debt and cost of equity for Marquez Luxury Travel Tours. What is the cost of capital at Marquez’ optimal capital structure given the above information?
The past five monthly returns for PG&E are −3.19 percent, 3.93 percent, 3.79 percent, 6.50 percent, and 3.60 percent. Compute the standard deviation of PG&E’s monthly returns.
Fisheries officials are stocking a barren lake with pike, whose number will increase annually at 40%. Fishing is prohibited the first 2 years and then 5000 pike can be removed in each of the 3rd and 4th years, so that the number remaining after the 4..
Ramstucky Corp bonds just paid their annual coupon of 4%. They mature in 6 years. The required rate of return on the bonds is 5%. So it’s a $10,000 bond selling for $9,000. The call price of the bonds is 102, but they are not callable until after the..
The yield to maturity on one-year zero-coupon bonds is 8%, the yield to maturity on two-year zero-coupon bonds is 10%. What is the forward rate of interest for the second year? If you believe in the expectations hypothesis, what is your best guess as..
Dubois Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $824,400. The purchase agreement specifies an immediate down payment of $227,800 and semiannual payments of $69,940 beginning at the end of 6 months for ..
When the required rate of return on a bond equals its coupon rate, the bond will sell at its par value. When interest rates rise, bond prices on outstanding issues fall. When interest rates fall, bond prices on outstanding issues rise.
The risk-return profile that this company holds is somewhat conservative, they are used to hold a return (average) of 30% on their other investment portfolios in South-east Asia, USA and Europe.
When a U.S.-based MNC has a subsidiary in Mexico that needs financing, the MNC's exposure to exchange rate risk can be minimized if: A foreign project generates a negative cash flow in year 1 and positive cash flows in years 2 through 5. The NPV for ..
What is the effect of external cash flows to TWR and MWR in the following scenarios? Additions to the portfolio prior to a period of weak performance. Withdrawals from the portfolio prior to a period of weak performance
Estes Park Corp. pays a constant $8.45 dividend on its stock. The company will maintain this dividend for the next 15 years and will then cease paying dividends forever. If the required return on this stock is 13 percent, what is the current share pr..
Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 12% of its $100 par value. Preferred stock of this type currently yields 7%. Assume dividends are paid annually. What is the value of Rolen's preferred stock?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd