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Union America Corporation (UAC) is planning to bid on a project to supply 150,000 cartons of machine screws per year for 5 years to the US NAvy. In order to produce the machine screws UAC would have to buy some new equipment. The new equipment would cost $780,000 to purchase and install. This equipment would be depriciated straight line to zero over the 5 years of the contract. However, UAC thinks it could sell the equipment for $50,000 at the end of year 5. Fixed production costs will be $240,000 per year, and variable costs of production are $8.50 per carton. UAC would also need an initial investment in Net Working Capital of $75,000 at the begining of this project. UAC has a cost of capital of 16% and a tax rate of 35%. What should be the bid price per carton on this project?
You reflect on these choices as well as other actions that could be taken. Describe the various actions that you might take and their implications.
analyze the following investment alternatives for the highest after-tax rate of return under the assumption that the client is subject to a 28% marginal federal income tax and a 5% state income tax. • A corporate bond with a 7% pretax return
A preferred stock is currently valued at $49 a share and pays an annual dividend of $4. The par value is $100 per share. What is the rate of return on this security?
Objective type questions on investment decisions and Ampulla Production Studios charges the Sound Effects Department's costs to two operating departments
The company has the following independent investment projects available: Project Initial Outlay IRR 1 $100,0000 10% 2 $10,000 8.5% 3 $50,000 12.5%
Is the DCF approach or the market multiple approach best for valuing a business? Are there conditions when one approach is preferred over the other?
what is the company's cost of equity? 8.81 percent 9.94 percent 9.37 percent 10.04 percent 10.46 percent
What is the estimated net present value of the project, after consideration of the potential future opportunity?
How much new long-term debt financing will be needed in 2012? Round your answer to the nearest cent. (Hint: AFN - New stock = New long-term debt.)
You have just taken out a 5 year loan from a bank to purchase an engagement ring. The ring costs $5,000. You plan to put $1,000 down and borrow $4,000.
Suppose you issued a 120-day forward contract to exchange 200,000 euros into Canadian dollars. How many dollars are involved?
Examine and discuss the characteristics of NPV and the role that this method plays in capital investment decision making.
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