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Consider the following situation: A business owner needs a new truck to help his business grow. It costs $25,000 right now and the price is expected to rise about 10 percent compounded quarterly. How should he make this purchase if he can afford about $400 per month in payments for this truck and his income is expected to go up slowly? Here are two options:He could buy the truck now. He could get $5000 as a trade-in on one of his current trucks. The financing of the balance would be at a rate of 16 percent compounded quarterly for a period of 3 years.He could set up a sinking fund at a bank. The rate would be 12 percent compounded quarterly. (Note: when he buys the new truck in 3 years, the trade-in will be worth less and the new truck will probably cost more.)Consider these questions as you make your decision:Which approach is more affordable?What are the comparative total costs of each of these two options?What are the most important mathematical factors for the business owner to consider?If the business owner had the cash, would he be better off buying the truck now without financing? Why or why not?If they are applicable, you may also bring in your own business or personal experiences to support your decision.
The firm's stock price increased 17.5 percent on the first day. What was the total cost to the firm of issuing the securities?
What is the NPV of Projects X and Y at discount rates of 0%, 15%, and 25%? (Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))
what is the present value of an annuity of 200 per year for five years if the required rate of return is 8? what is the
Choose a corporation for analysis that has been profitable for the last three fiscal years, is not a bank or financial institution, and is on a major United State Stock Exchange.
1. you have been selected to calculate the risk factors for a new project. in order to determine which risk factors
use the following income statements and balance sheets to calculate garnet inc.s free cash flow for 2003.garnet
S. Strigel Chemical Corporation issued $5,000,000 face value, 10%, 10-year bonds at $5,679,533. This price resulted in an 8 percent effective-interest rate on the bonds.
If the appropriate interest rate is 13 percent, what kind of deal did the player snag? Assume all payments are paid at the end of the year.
General Motors may file for bankruptcy during this class. Find the GM 2008 Annual report and review the total revenue, net income and profits for 2008 compared to previous year.
Interest rate or discount rate. Fill in the interest rate for the following table using one of the three methods below.
The additional net working capital from this project of $50,000 is expected to return to its pre-project level upon termination. What is the non-operating terminal cash flow of the machine?
Describe the advice that you would give to the client for raising business capital using both debt and equity options in today's economy
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