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I. SAMPLE PROBLEM # 1 A "mom and pop store" is going to make a $15,000 investment that will produce the following cash inflows: Year 1.....$11,000 Year 2.....$ 9,000 Year 3.....$ 5,800 a). What is the payback period for this investment? b). Assuming a discount rate/cost of capital of 10%, what is the NPV of this investment and should it be accepted? II. SAMPLE PROBLEM # 2 Consider the following project: Year 0 Investment..... -$145,000 Year 1 Cash Flow....... 71,000 Year 2 Cash Flow....... 68,000 Year 3 Cash Flow....... 52,000 What is the IRR and if the required rate of return is 14%, should the project be accepted? 2. In the overall process of assessing project risk, what is the difference between sensitivity and scenario analysis. How can each be used to measure and prepare for risks associated with capital budgeting efforts? Is one approach better than the other?
So the fewer withdrawal the less fees would occur, but the more money left in the bank, the more interest is being earned.
Explain how Jenny might optimally invest $1,000,000 in a portfolio of financial assets to earn an expected return of 14 percent per annum and determine the risk that she would face in doing so.
How much will you have paid to lease the car for the five-year term? Because the car reverts to the dealer after 5 years, the net ownership cost is the total of all the lease payments for the 5 years.
Most qualified plan sponsors seek an advance determination letter from the IRS stating that the plan provisions meet Code requirements.
Griff's property tax is $670.64 and is due April 10. He does not pay until June 21. The county adds a penalty of 7.5% simple interest on unpaid tax. Find the penalty Griff will pay. (Assume there are 365 days in a year.)
Rocky Mount Metals Company manufactures an assortment of wood-burning stoves. The average selling price for the various units is $500. The associated variable cost is $350 per unit. Fixed costs for the firm average $180,000 annually.
Assume that IBM would like to borrow fixed-rate yen, whereas Korea Development Bank (KDB) would like to borrow floating-rate dollars.
Assume the price of beef is anticipated to rise to $3.10 in United States and to £4.65 in Britain. What should the one-year forward $/£ exchange rate be?
What is the incremental cash flow related to working capital when the store is opened?
Why the machine has been depreciated using the straight line method, while the building has been depreciated using the diminishing method. Shouldn't both be depreciated using diminishing?
What is the relationship between the present value of a single dollar payment formula and present value of ordinary annuity formula for same number of years and same discount rate?
Telecraft Enterprises carries 46 days of inventory in its stores. Last year Telecraft reported net sales of $1,401,100 and had receivables of $303,600 at the end of the year. What is the operating cycle at Telecraft ?
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