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You are evaluating the HomeNet project under the following? assumptions: You depreciate the? equipment, costing $ 7.5?million, over three years using? straight-line depreciation. Research and development expenditures total $ 15million in year 0 and? selling, general, and administrative expenses are $ 2.8 million per year? (assuming there is no? cannibalization). Also assume HomeNet will have no incremental cash or inventory requirements? (products will be shipped directly from the contract manufacturer to? customers). However, receivables related to HomeNet are expected to account for 15 %of annual? sales, and payables are expected to be 15 %of the annual cost of goods sold. Under these assumptions and assuming a cost of capital of 12 %,
?calculate:
a. The? break-even annual sales price decline? if: sales of 50,000 units in year 1 increase by 50,000 units per year over the life of the? project, the year 1 sales price is $ 260?/unit, and the year 1 cost of $ 120/unit decreases by 25 % annually.
b. The? break-even annual unit sales increase? if: sales are 50,000 units in year? 1, the year 1 sales price of $ 260/unit, decreases by 10 % annually and the year 1 cost of $ 120/unit decreases by 25 % annually.
Suppose you buy stock at a price of $66 per share. Five months later, you sell it for $70. You also received a dividend of $.54 per share. What is your annualized return on this investment?
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What will be the cost of equity after the repurchase?
A share of common stock has just paid a dividend of $2.00 that is D0= $2.00. If the expected long-run constant growth rate for this stock is 5 percent, and if investors require an 8 percent rate of return (Rs=8%), what is the expected price of the st..
What factors contribute to an expansion of the commercial paper market? - What factors cause a contraction in the commercial paper market?
When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star c..
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On January 1, 2015, XXX Corporation acquired equipment for $260,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated salvage value is $20,000. If XXX Corporation uses the units of production method of depreciation, what ..
Phone home inc. is considering a new 4 year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to 0 over it's 4 year tax life, after which time it will have a market valu..
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