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1. A company is considering entering into a new marketing campaign. If it engages in this marketing campaign, it must pay $9,000 immediately and $7,000 each at the end of year 1 and year 2. The company believes its annual revenues due to the marketing campaign will be $11,000 at the end of year 1, $9,000 at the end of year 2, and $6,000 at the end of year 3. What is the annual equivalent worth of this marketing campaign over the next three years? The interest rate is 6.8% compounded annually."
2. "Motors R Us requires a specific painting process for one its automobiles that will be manufactured for exactly eight years. Three options are available. Neither option 2 nor option 3 can be repeated after its process life. However option 1 will always be available at the same cost during the period of eight years. Here are the options: -Option 1 is to subcontract out the process at a cost of $116,000 per year. -Option 2 costs $151,000 immediately and has annual operating and labor costs of $85,000 and a useful service life of eight years with a salvage value of $41,000. -Option 3 costs $118,000 immediately and has annual operating and labor costs of $75,000 and a useful service life of five years with a salvage value of $23,000. For years six through eight, the firm will follow option 1. Enter the ""net present cost"" for the option that you would recommend if i = 14.8%. Enter your answer as positive number."
Mr. Richards has a client ready to retire. They have approximately, $1.5 million in an account with the firm. They are very conservative client and he want to gove them options. The first is to have the money paid out over 30 years earning a 2% rate,..
A company has a project with an initial after-tax cash savings of $40,000 at the end of the first year. These savings will increase by 2% annually. The firm has a debt-equity ratio of 1/3, a cost of equity of 16%, a cost of debt of 10%, and a 35% tax..
Explain how the Federal Reserve can increase the Federal Funds rate to a new prescribed target. In your explanation, include the Federal Reserve's underlying policy tool, how the Fed needs to use it for this task, and a balance sheet for the Fed that..
__________ is the absence of knowledge of the outcome of an event before it happens.
Your spreadsheet should become more generic so different cash flows could be entered easily into the model
Why is superfluous diversification unavoidable for a large institutional investor? What support does portfolio theory provide for the usefulness of the Beta concept? What do we mean when we say Beta is non-stationary? What is/are the value(s) of Beta..
McGilla Golf has decided to sell a new line of golf clubs. What are the best-case and worst-case NPVs?
What is the duration of a two-year bond that pays an annual coupon of 9 percent and whose current yield to maturity is 13 percent?
Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $139.65 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for..
Calculate the project’s net present value for discount rates of 0, 50%, and 100%.
How much interest would she pay (annualized) if she does not pay off her credit card balance?- How much interest will she lose if she writes the check out of her money market account? Should she write the check?
Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline.
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