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A project costs $1 million and has a base-case NPV of exactly zero (NPV=0). What is the project's APV in the following cases.
A) If the firm invests, it has to raise $500,000 by a stock issue. Issue costs are 15% of net proceeds. B) if the firm invests, its debt capacity increases by $500,00. The present value of interest tax shields on this debt is $76,000
Use 2 transactions in recent financial news to illustrate and explain the roles of financial intermediaries, and banks in particular, in these transactions.Furthermore, explain how these transactions would occur without a financial intermediary.
The truck falls into the MACRS five year class life(applicable annual percentages are 20%, 32%, 19%, 12%, 11% and 6%) and the truck will be sold after two years for $40,000.
Assume that expected rates of inflation over the next 5 years are 4 percent, 7 percent, 10 percent, 8 percent, and 6 percent, respectively. What is the average expected inflation rate over this 5-year period?
The Ohio Freight co. common stock is selling for $80 the day before the stock goes ex-dividend. The annual dividend yield is 5.4%, and the dividends are distributed quarterly.
Compute the Medical Associates' cost of equity estimate by using the DCF method. Calculate the cost of equity estimate using CAPM.
If the company has 30 million shares of stock outstanding, what is the best estimate of the stock's price per share? show work please.
How are short-term and long-term financing approaches used to optimize the acquisition of funds?
What is the present value of your equity holdings under the scenario where the firm plans to borrow $150K in the third year? How does this differ from your answer to a)? How does your answer contrast with the answer in Question 5? Explain the differe..
Describe the three types of project risk. Under what situation in each of the types most relevant to the capital budgeting decision.
Benson Corporation is evaluating option uses for a three-story manufacturing and warehousing building that it has bought for $225,000.
Suppose you are given the following risk-free spot rates for zero bonds maturing in 1,2, 3, 4 years, respectively : R1 = 0:05, R2 = 0:055, R3 = 0:0574, R4 = 0:06. Find the annualized two period forward rate beginning at period 2.
The old press was purchased 2 years ago for an installed cost of $35,000 and can be sold for $20,000 net of any removal costs today. Both presses are depreciated under the MACRS 5-year recovery schedule. The firm is in 40 percent marginal tax rate..
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