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Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.512 million. The fixed asset falls into the 3-year MACRS class (MACRS Table). The project is estimated to generate $1,344,000 in annual sales, with costs of $537,600. The tax rate is 34 percent and the required return is 10 percent. The project requires an initial investment in net working capital of $168,000 and the fixed asset will have a market value of $117,600 at the end of the project. Required: (a) What is the net cash flow of the project for the following years? (Do not include the dollar signs ($). Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 1,234,567.89)) Net cash flow Year 0 $ Year 1 $ Year 2 $ Year 3 $ (b) What is the NPV of the project?
Assume the market risk premium is 6.5% and risk free interest rate is 5%. Compute the cost of capital of investing in project with beta of 1.2.
Interest rate or discount rate. Fill in the interest rate for the following table using one of the three methods below.
Assume that one-year treasury bills yield 4% in the United State and 5 percent in Germany. Investors will be indifferent between them if they expect the dollar over the next year to.
ABC is expected to pay a dividend of $1.7 per share at the end of the year. The stock sells for $148 per share, and its required rate of return is 17.9%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (..
Calculating returns and variability you have observed the following return on Mary ann Data Corporation's stock over the past five years: 216%, 21%, 4%, 16%, and 19%.
XieCorp is analyzing the performance of its cash management. On average, the company holds inventory 65 days, pays its suppliers in 35 days, and collects its receivables in fifteen days.
Consider a six month put option on a stock with a strike price of $32. The current stock price is $30 and over the next six months it is expected to rise to $36 or fall to $27. The risk free rate is 6%.
Calculate the required rate of return for Mars Inc.'s stock. The Mars's beta is 1.2, the rate on a T-bill is 4 percent, the rate on a long-term T-bond is 6 percent, the expected return on the market is 11.5 percent.
Ace had 10 million in assets. It is consider a 40 percent debt/asset ratio vs. its current 20 percent debt/asset ratio. Debt arriews interest charges of 12 percent and shares sell for $20 per share.
You buy 600 shares of stock at a price of $86 and an initial margin of 75 percent. If the maintenance margin is 40 percent, at what price will you receive a margin call?
If Jake discounts the future price of the trees at 10% per year, what is the present value of their future prices? You should show your work! Please explain your answer.
Suppose ABC are all positively correlated. A fourth stock is being considered for addition to the portfolio, either stock D or stock E. Both D and E have expected returns of 12 percent.
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