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A prospective MBA student earns $60,000 per year in her current job and expects that amount to increase by 13% per year. She is considering leaving her job to attend business school for two years at a cost of $40,000 per year. She has been told that her starting salary after business school is likely to be $130,000 and that amount will increase by 11% per year. Consider a time horizon of 10 years, use a discount rate of 9%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive alternative? Please round your answer to the nearest dollar. Please double check answer, as the last one was given to me incorrect.
Given the following information and assuming a CCA rate of 20%, what is the NPV of this project?- Initial investment = $400,000; - life = five years;
A bond with a coupon rate of 8% makes semiannual coupon payments on January 15 and July 15 of each year. The ask price for the bond on January 30 is at 100:08. What is the Invoice Price of the bond? The coupon period has 182 days.
USF Inc. issued a 20 year bond at a coupon rate of 7.0 percent. The bond makes semi-annual payments and has a par value of $1000. If the YTM on this bond is 6.0 percent, what is the bond's current price?
You are the borrower in an FRA where you will pay 5% (annual compounding) for the third year on $1 million. Write down the calculate process. The current forward interest rate for the third year is 5.1% (annual compounding). The 3-year zero rate is 4..
Ziggs Corporation will pay a $4.80 per share dividend next year. The company pledges to increase its dividend by 4.50 percent per year, indefinitely. Required: If you require a 11 percent return on your investment, how much will you pay for the compa..
Find the value of a European call option with:
A firm has a market value equal to its book value. Currently, the firm has excess cash of $2,000 and other assets of $4,800. Equity is worth $6,800. The firm has 850 shares of stock outstanding and net income of $1,050. The firm has decided to spend ..
Some advocates of behavioural finance agree with efficient market advocates that indexing is the optimal investment strategy for most investors. But their reasons for this conclusion differ greatly. Compare and contrast the rationale for indexing acc..
Consider a firm with a debt-equity ratio of 0.40. The required rate of return on this firm’s unlevered equity is 18% and the pre-tax cost of debt is 8%. Sales, which totalled $34 million last year, are projected to remain at that level for the forese..
Atlantis Fisheries issues zero coupon bonds on the market at a price of $501 per bond. These are callable in 10 years at a call price of $560. Using semi annual compounding, what is the yield to call for these bonds?
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 19 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its..
Graser Trucking has $19 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 19%, and its return on assets (ROA) is 5%. What is its times-interest-earned (TIE) ratio?
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