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Smile photo, inc., is a nationally franchise company with over 50 outlets located in the southern states. part of the franchise agreement promises a centralized photo developing process with overnight delivery to the outlets. Because of the tremendous increase in demand for its photo processing, Emma Dubarry, the corporation's president, is considering the purchase of a new, deluxe photo processing machine by the end of this month. Dubarry wants you to formulate a memo showing your evaluation of this purchase. Your memo will be presented at the board of directors' meeting next week. According to your research, the new machine will cost $320,000. It will function for an estimated five years and should have a $32,000 residual value. All capital investments are expected to produce a 20 percent minimum rate of return, and the investment should be recovered in three years or less. All fixed assets are depreciated using the straight-line method. The forecasted increases in operating results for the new machine are as follows: CASH FLOW ESTIMATES Year Cash Inflows Cash Outflows 1 $310,000 $210,000 2 $325,000 $220,000 3 $340,000 $230,000 4 $300,000 $210,000 5 $260,000 $180,000 1. In preparating for writing your memo, answer the following questions: a. What kinds of information do you need to prepare this memo? b. Why is the information relevant? c. Where would you find the information? d. When would you want to obtain the information? 2. Analyze the purchase of the machine and decide if the company should purchase it. Use (a) the net present value method, (b) the accounting rate-of-return method, and (c) the payback period method. 3. What is the profitability index of the project? 4. What is the IRR of the project?
Debt: 25,000 bonds outstanding, each with a coupon rate of 6.5% paid semi-annually, par value of $1,000, maturity of 20 years, and current value of 96% of par.
Explain Portfolio management through diversification and The portfolio should contain both large and small company shares
What is the current strategic plan for DaimlerChrysler?
If Congress prefers to decrease spending, rather than raise taxes, in an effort to reduce the budget deficit, determine the Fed do to keep GDP and employment stable?
Mary Joe has a credit line of $1,000,000 (or equivalent in major currencies) for arbitrage. She had access to the following rates, and she managed to generate CIA profits.
Mark wants to buy a new car in three years. The car is expected to cost 80,000 in 3 years. If Mark can find an investment yielding 12% over the three year period,
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The Peace River Corporation has 62,000 shares of stock outstanding at a market price of $48 a share. The company has just announced a 3-for-2 stock split. How many shares of stock will be outstanding after the split?
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Lee Financial Services pays employees monthly. Payroll information is given below for January 2011, 1st month of Lee's fiscal year. Suppose that none of employees exceeded any relevant wage base.
ABC Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock?
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