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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $769 per set and have a variable cost of $399 per set. The company has spent $114534 for a marketing study that determined the company will sell 53353 sets per year for seven years. The marketing study also determined that the company will lose sales of 9626 sets of its high-priced clubs. The high-priced clubs sell at $1038 and have variable costs of $742. The company will also increase sales of its cheap clubs by 10726 sets. The cheap clubs sell for $457 and have variable costs of $226 per set. The fixed costs each year will be $8882350. The company has also spent $1173327 on research and development for the new clubs. The plant and equipment required will cost $28289005 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1343483 that will be returned at the end of the project. The tax rate is 28 percent, and the cost of capital is 11 percent. What is the annual OCF for this project? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.) Hint: there are two sunk cost numbers in this question. Also, you want to consider the many spillover effects of the project.
Filer Manufacturing has 8.8 million shares of common stock outstanding. The current share price is $58, and the book value per share is $3. Filer Manufacturing also has two bond issues outstanding. Suppose the company’s stock has a beta of 1.1. The r..
An investor purchases a 30-year U.S. government bond for $840. The bond’s coupon rate is 10 percent and, it still had twelve years remaining until maturity. If the investor holds the bond until it matures and collects the $1000 par value from the Tre..
Schweser Satellites Inc. produces satellite earth stations that sell for $95,000 each. The firm's fixed costs, F, are $2.5 million, 50 earth stations are produced and sold each year, profits total $500,000; and the firm's assets (all equity financed)..
Atlantic Northern Inc. pays an annual dividend rate of 8.00% on its preferred stock that currently returns 10.72% and has a par value of $100.00. What is the value of Atlantic Northern Inc.'s stock? Suppose, due to high inflation, interest rates rise..
What is the Net Present Value (NPV) of the asset if the company's required rate of return on such assets is 10%?
Sun Corp. is thinking of changing their business model. Currently their beta is 2 and the last dividend paid (yesterday) was $2.00. The growth rate of the dividend is constant at 3. If they change their business model, they believe that they can incr..
The fact that Real Estate is fixed in location means that: Which of the following is true about property rights? Which of the following statements about real estate as a merit good is false? Why is Euclidean zoning permissible? Which of the following..
Prada has ten million shares outstanding, generates free cash flows of $ 60 million each year and has a cost of capital of 10%. It also has $40 million of cash on hand. Prada wants to decide whether to repurchase stock or invest the cash in a project..
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $32,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second,..
A bond matures in 30 years, has a 20 year duration and a yield to maturity of 9.32%. The change in the level of the market interest rate is 0.47%. What is the modified duration and the percentage change in price? What is the tax-equivalent yield of a..
What is the difference between liabilities and equity? What makes a liability a current liability? Give some examples of current liabilities.
Stock A has the following returns for various states of the economy: State of the Economy Probability for Stock Ws Return
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