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!
Blue Gills Corporation is looking to build a toll road in Iowa. The initial investment in paving equipment is $81 million. The equipment will be fully depreciated using the straight-line method over its economic life of ten years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $6.8 million per annum for 20 years starting from the end of the first year. The corporate tax rate is 40 percent. The required rate of return for the project under all-equity financing is 9.5 percent. The private, pretax cost of debt is 7.6 percent. To encourage investment in the country’s infrastructure, the U.S. government could subsidize the project with a $36 million, 15-year loan at an interest rate of 4.5 percent per year. All principal will be repaid in one balloon payment at the end of Year 15.
a. What is the value of this project using the private debt financing with equity? (Hint: APV)
b. What is the value of this project WITH the loan subsidy combined with equity?
Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's inventory. Make the following assumptions: current year's sales are $27,800,000; current year's cost of goods sold is $17,528,00..
Identify at least two sources of working capital (short-term financing resources) that are used in organizations to finance current assets. What are the implications if an organization's current assets are not properly matched? Include at least o..
Which of the following should not be included in a schedule of cash flows from operations when evaluating a capital project? A. revenues B. sunk costs C. depreciation D. variable costs
Given an optimal capital structure that is 50% debt and 50% common stock, calculate the weighted average cost for capital. Coupon rate on bonds: 9 %. Yield to maturity on bonds: 11% next expected dividend on common stock 3.00$, current price for comm..
You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.4, a debt-to-equity ratio of 0.4, and a tax rate of 40 percent. Based on this information, what is La..
Calculate the bond equivalent yield and effective annual return on a jumbo CD that is 120 days from maturity and has a quoted nominal yield of 6.50 percent.(Use 365 days in a year. Do not round intermediate calculations. Round your answers to 3 decim..
D Corporation has three bonds outstanding. All three have a coupon rate of 7 percent and a $1000 par value. The first bond has one year left to maturity. The second bond has 4 years left to maturity. What is the value for the first bond with eight ye..
Explain what depreciation, cash flow, operating cash flow and NPV are and how they interact with business decisions. Explain why these financial concepts are important for you as an employee, owner, or investor.
Shakina Harris, who works in her brother’s hardware store, is in charge of purchasing. Shakina has determined that the annual demand for #6 screws is 150,000 and is fairly constant over the 200 days that the store is open each year. Shakina’s brother..
The Johnson Co. grants options on 5,000 shares of its common stock. The fair market value of each option on the grant date is $3 per share. The exercise price is $2. The tax rate (all years) is 20%. What is the ending balance of Paid-in capital tax e..
A share of stock with a beta of .74 now sells for $50. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 5%, and the market risk premium is 8%. The stock is a good/bad buy and the investors will/will not invest?. At what..
Assume Evco, Inc. has a current stock price of $45.91 and will pay a $1.75 dividend in one year; its equity cost of capital is 14%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify ..
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