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Company x intends to finance a project. The source of capital will be a bank loan. The terms of the loan are an interest rate of 6%, a maturity of five years, semiannual interest payments, a loan amount of $500,000. No principal is repaid by the borrower until the end of year five when the loan matures and the $500,000 must be repaid in full (five years from the time the loan is made). The company rule is that only projects that have cash flows with a present value greater than the present value of the loan amount should be accepted. The interest rate the company uses to discount the project cash flows also called the required rate of return is 10%. This project should be accepted by managers? True or False
Corporation X wants to create additional supply development space. The additional space will cost $450,000. The expansion can be financed either by bonds at interest rate of 8 percent, or by selling 40,000 shares of common stock at $20 per share.
However, competitive pressures and increased costs are expected to shrink margins to 11% in years 4 and 5. Taxes will remain at 40% and the WACC for ABC company is 12%.
What is an opportunity cost rate, is it used in the discounted cash flow analysis.
why has honda motor company been so successful and why general motors been lagging.
Suppose your younger sister will start college in 5-years. She has just informed your parents that she wishes to go to Harvard University, which will cost $18,000 every year for four years
In your planning phase of a new system, you are require to do a feseality study , with the given information calculate the net present value and the overall return of investment.
Calculate the required pre-tax earnings to cover debt and preferred stock obligations, before and after the recapitalization?
canvas reproductions has fixed operating costs of 12500 and variable operating costs of $5.51 per unit and sells its paintings for $22.39 each. at what level of unit sales will the company break even in terms of EBIT?
A linoleum producer has fixed expense of $70,000. Its product currently sells for $4 per unit and has a variable expense of $2.60 each unit.
Suppose you need $ 15 million today and you repay it in six months. How much interest will you pay?
It needs to spend $10 million on new fixed assets and $16 million to increase its current assets, and it expected its accounts payable to increase by $2 million and its accruals to increase by $4 million. What is its free cash flow (FCF)?
Greg recently inherited a large, family-run farm that primarily produces grain for harvest each year. Compute the long position gain or loss in this scenario.
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