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A project currently generates sales of $7 million, variable costs equal 60% of sales, and fixed costs are $1.4 million. The firm’s tax rate is 40%. Assume all sales and expenses are cash items.
a. What are the effects on cash flow, if sales increase from $7 million to $7.7 million? (Input the amount as positive value. Enter your answer in dollars not in millions.)
Cash flow ________ by $ ___________
b. What are the effects on cash flow, if variable costs increase to 65% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.)
Cash flow__________ by $ __________
Chartreuse County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 15 percent per year for the next 8 years before levelling off at 6 percent into perpetuity. The required return on the company’s stock is 12 percen..
You have been offered the opportunity to invest in a project that will pay $5024 per year at the end of years one through three and $13872 per year at the end of years four and five. If the appropriate discount rate is 18.12 percent per year, what is..
Find the Annual equivalent cost for the the following two alternatives and show all work.
A project currently generates sales of $12 million, variable costs equal to 60% of sales, and fixed costs of $2 million. The firm’s tax rate is 50%. The project will last for 10 years. The discount rate is 12%. What is the effect on project NPV, if s..
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A 8-year bond has a par value of $1,000 and a coupon rate of 5 percent. During the first six months after the bond was Issued, the inflation rate was 1.3 percent. By how much does the principal of the bond increase? What is the coupon payment after s..
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You Purchased a 4% coupon, $1000 par value bond. It has 8 years to maturity. If the required rate of return for bonds of this risk level is 12%, how much would you pay for this bond? If interest rates changed instantly to 15%, what would be the price..
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