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We are evaluating a project that costs $1106932, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 40774 units per year. Price per unit is $46, variable cost per unit is $23, and fixed costs are $821848 per year. The tax rate is 38 percent, and we require a 7 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-12 percent. What is the NPV of the project in worst-case scenario? (Negative amount should be indicated by a minus sign. Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)
The risk-free rate of interest is 2%. Stock AAA has a beta of 1.4 and a standard deviation of return = .40. The expected return on the market portfolio is 9%. Assume CAPM holds. What is the standard deviation of return for the portfolio in (a) above?
The price sensitivity of a bond increases in response to a change in the market rate of interest as the:
Companies U and L are identical in every respect except that U is unlevered while L has $10 million of 5.9% bonds outstanding. Assume that (1) all of the MM assumptions are met, (2) both companies are subject to a 34% federal-plus-state corporate tax..
Science Co. manufactures industrial products and employs a calendar year for financial reporting purposes. Items (a) through (e) present several of Science Co. transactions during 2007. The total of cash equivalents, marketable securities, and net re..
Samuelson will produce 20,000 units in January using level production. If each unit costs $500 to manufacture, what is the dollar value of ending inventory in January if beginning inventory is 10,000 units and January sales are 15,000?. Select one: a..
The local home improvement store has a washing machine on sale for $601, with the payment due in 2 years from today. The store is willing to discount the price at an annual rate of 9 percent (compounded annually) if you pay today. What is the amount ..
Calculate the cost of capital for Rio Tinto and state two reasons for why it may have declined since the GFC. Justify your answers using theory, calculations and research into current events.
You find a zero coupon bond with a par value of $10,000 and 19 years to maturity. The yield to maturity on this bond is 4.1 percent. Assume semi annual compounding periods. What is the price of the bond?
What is the cost/volume/profit technique? Give examples where your company (Apple INC) could use this analysis. Be sure to explain how you would go about determining the numbers (individual components) for the calculation and any constraints you see ..
J.W. Kingdon describes the agenda setting stage of policy formulation as a function of the confluence of three "streams" of activities: problems, possible solutions to the problems, and political circumstances
When estimating the cost of debt to use in the WACC, which of the following types of debt should be included?
Maxcorp’s bonds sell for $1,264.57. The bond life is 9 years, and the yield to maturity is 7.8%. What is the coupon rate on the bonds?
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