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Ebay is considering whether to establish a sale distribution center in China. Given the large Chinese consumer market, Eaby estimates that its net sales revenues will be 15 million yuans in the first year, 20 million yuans in the second year, and 35 million yuans in the third year. The current spot rate is 6 yuans per US dollar.
The project is assumed to have a beta of 1. The Chinese market risk premium is 10%, and U.S. market risk premium is 6%. The risk free rate is assumed to be 6%. Ebay’s initial investment outlay, consisting of plant and equipment, is estimated at 12 million yuans, and the plant and equipment will be depreciated on a straight-line basis over a three-year period, with salvage value of 2 million yuans. The corporation tax rate is 25% in China and 35% in the US.
Should Ebay establish the distribution center? Why?
Company a and company b have the same gross profit margin and the same total asset turnover, - but company a has a higher return on equity, why?
How might a bank adjust its credit policies if the area expierneces a sudden or dramatic downturn? Suggest two adjustments the bank should make when applying the five C's of credit in such a situation.
DiCapri Company is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated straight-line method over its 3-year life, and would have a zero salvage value. No new working capit..
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standard cost is a predetermined amount that-Should be incurred under relatively efficient operating conditions-Will be incurred for an operation or a specific objective-Must occur for an operation or a specific objective
The first financial statement a firm produces is the _____.
The Ape Copy Company's preferred stock pays an annual dividend equal to $16.50. If investors demand a return equal to 11 percent to purchase Ape's preferred stock, what is its market value?
The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 25% debt based on market values, its cost of equity, rs, will increase to 11% to reflect the increased risk. What happens..
A company selling beseball gloves has fixed costs of $1800, and it costs an additional $26.51 to produce each glove. If the company charges a price of $168.95 per glove, how much should the company expect to cover in costs in order to earn a profit o..
Eureka, Inc., a US-based company does business in Ukraine also. The currency of Ukraine, hryvnia, is very volatile. There is always the possibility that hryvnia will depreciate with respect to the dollar. The company will have to reports its assets i..
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