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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.646 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $205,800. The project requires an initial investment in net working capital of $294,000. The project is estimated to generate $2,352,000 in annual sales, with costs of $940,800. The tax rate is 35 percent and the required return on the project is 10 percent. what are the net cash flows in years 0, 1, 2, and 3? what is NPV?
The common stock currently sells for $37 per share and has a beta of 1.45, and the bonds have 15 years to maturity and sell for 118 percent of par. The market risk premium is 7.7 percent, T-bills are yielding 4 percent,
Monicaclinton Ltd., a wholesale importer, is in the process of issuing $6,000,000 of 12% coupon debt with a maturity of 5 years. A sinking fund must be established to retire 60% of the issue prior to maturity.
On May 1, 2011, Stanton Company purchased $50000 of Harris Company's 12% bonds at 100 plus accrued interest of $2000. On June 30, 2011, Stanton received its first semiannual interest.
Thirsty Cactus Corp. just paid a dividend of $1.20 per share. The dividends are expected to grow at 15 percent for the next eight years and then level off to a growth rate of 5 percent indefinitely.
The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2010, 90% of the merchandise had been sold and 10% remained in inventory. The company uses a periodic system.
Metasteel Limited Co. has a stable sales track record but does not expect to grow in the next several years. Its last annual dividend was $5.75. If the required rate of return on similar investments is 18 percent
Red Cat Firecrackers is considering whether to build a large or small factory to produce its firecrackers. Regardless of the production method, each bundle of firecrackers sells for $4.00.
CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $492,000 is estimated to result in $191,000 in annual pretax cost savings.
Crown Cinema recently increased the price of a movie ticket by 5%. As a result, attendance dropped by 8%. Based on this information, what is the price elasticity of demand for movie tickets at Crown
Video Toys manufacturers and sells arcade games. Dividends are currently $1.50 per share and are expected to grow at a 15% compound annual rate over the next three years.
The bonds have a face value of $1,000 and an 12% coupon rate, paid semiannually. The price of the bonds is $850. The bonds are callable in 5 years at a call price of $1,050.
Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target
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