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Company A has the following capital structure:
Long term debt $45,000 (average cost of debt is 8%)Equity $55,000 (cost of equity is 18%)Tax rate is 40%
Company A is considering a project which would cost $25,000. it is considering raising the capital to fund the project through debt. The cost of debt would be 10%, due to the increase in leverage of the company, not due to external economic conditions.
What is the WACC prior to the expansion? After the expansion? Why would leverage cause the increase in the cost of debt.
Required: (a) Calculate the NPV of going directly to market now. (Do not include the dollar sign ($). Enter your answer in dollars, not millions of dollars. (e.g., 1,234,567)) NPV $ (b) Calculate the NPV of test marketing first.
Paulk purchased a home for 150,000.he paid 30,000 down and agreed to pay the rest in equal payments over 15 equal end of year payments at 11percent compound interest on the unpaid balance. How much would the equal payments be?
What are unique risks associated with foreign investments? How might an investor protect his/her portfolio against these risks? Is it possible to protect a portfolio from all types of risk? Explain your answer.
The critical importance of money, bond, stock and mortgage markets as potential investment options is highlighted in terms of their impact on financial sector. Describe the linkages between each market, and how investors' choices would be affected.
What is your assessment of the stipulation placed on the acquisition by the Australian government? 3 Which of the various valuation techniques do you find the most and least useful? 4 Do you think the offer is a good one? Should Quillan take it?
If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
Suppose that Ken-Z Art Gallery has annual sales of $884,000, cost of goods sold of $574,000, average inventories of $160,000, average accounts receivable of $129,000, and an average accounts payable balance of $86,000.
A project will produce an operating cash flow of $14,600 a year for 8 years. The initial fixed asset investment in the project will be $48,900.
A stock has had returns of ?19.9 percent, 29.9 percent, 34.8 percent, ?11.0 percent, 35.7 percent, and 27.9 percent over the last six years.
Computation of effect of hiring employees and what should the company do to meet this demand
Find out the future value of $9,000 at the end of five periods at 8% compounded interest? Find out the present value of $9,000 due eight periods hence, discounted at 11%?
Shouldn't the IFE discourage investors from attempting to capitalize on higher foreign interest rates? Why do some investors continue to invest overseas, even when they have no other transactions overseas?
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