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The law firm of Bushmaster and Bushmaster, LLC is considering investing in a complete small business computer system. The initial investment will be $35,000. The computer system is expected to provide additional revenue of $16,000 per year for the next four years. However, in year four, the law firm would be required to spend $5,000 for upgrades. Its WACC is 12%. What is its NPV and should the firm buy the computer?
Banyan Co.’s common stock currently sells for $37.50 per share. The growth rate is constant 12%, What would be the cost of new equity?
Which one of the following is an example of a nondiversifiable risk?
Even a rough NPV can be a great way to weed though a group of projects to find the top picks that need further analysis. Most department managers can understand a simple "will it make money or not" and NPV can be an excellent way to help non-financia..
Why is there a positive price response when a company's shares are cross-listed? Why might the response for emerging-market firms be larger than for developed-market firms? Without knowing that equity issues in a domestic context are associated with ..
Suppose that the six-month spot rate is 6.00% and one-year spot rate is 6.10%. Additionally, suppose that you can look into a crystal ball and know for sure that six months from now that the six-month forward rate will be 6.2%. What would be your inv..
Growth Enterprises believes its latest project, which will cost $82,000 to install, will generate a perpetual growing stream of cash flows.
A firm is considering whether to issue the following securities: Fees reduce the proceeds to the issuer on the issuance date. Which financing alternative is best? Calculate borrowing costs and discuss other factors that might influence your decision
Determine the transaction price of the arrangement for Oriole, Determine the revenue that Oriole will recognize in 2017:
A share of stock sells for $44 today. The beta of the stock is 1.6, and the expected return on the market is 12 percent. The stock is expected to pay a dividend of $.70 in one year. If the risk-free rate is 4.3 percent, what should the share price be..
The 2012 NCAA Men's final game between Kentucky and Kansas came in at 10.8 / 18.4 . While not a ratings record for the game, industry experts considered it a success. Assume that there are 114 million American households with televisions.
While checking the Wall Street Journal bond listings you notice that the price of an AT&T bond is the same as the price of a K-Mart bond. Based on this information you know that
Suppose there are no government zero-coupon bonds. If investors demand default-free zeros, outline the process that would create these zeros using government coupon paying bonds. Illustrate the method with a case of a four-year, 5 percent government ..
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