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A company specializing in earth-moving equipment is contemplating expanding its operations. It must decide whether to build a large plant or a small plant. There is a 60% chance that demand for the equipment will be strong and a 40% chance that demand will be weak. If a large plant is built, a profit of $10 million will result if demand is large. and a profit of only $1 million if demand is weak. If the company builds a small plant and the demand is weak, profits of $4 million will be made. If demand is strong and the company has a small plant, the likelihood of competition is greater. Should there be competition arising in the company could either build another smaller plant in a different area or expand the existing plant. If the company decides not to invest in another plant, profits of $6 million is expected, whether there is competition or not. If there is competition, either form of expansion is expected to yield a profit of $8 million with a70% probability, and a profit of $6 million with a 30% probability. If there is no competition, building a separate plant would yield a profit $9 million with a 80% probability and a profit of $7 million with a 20% probability.
Expanding the existing plant is expected to yield a profit of $7.5 million.
With the aid of a decision tree, prepare a quantitative report advising the company on the best course of action.
After tax profit margin is 3 percent & the company pays out 40 percent of its earnings in dividends. Sales last year were 12,000. Profit Margin & payout ratio will remain steady.
Presence of the taxes increase or decrease the value of the firm
Suppose you borrow $350000 to create a new home. The bank charges an interest rate of 5 percent compounded monthly. If you pay back the loan after 25 years find your monthly payments.
aarons sailboats has decided to take the company public by offering a total of 120000 shares of common stock to the
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Imagine you are a small business owner. Determine the financial ratios that are important to the business. Compare your ratios with those that are important to a manager of a larger corporation.
Formulate a linear program to determine the expected mix of medical treatments to ensure the maximum profit is obtained. Provide all workings and solve using a computer packageto generate the ideal solution.
For a recent year, Wicker Company had the following sales and expenses: Suppose that the variable costs consist of food and packaging, payroll, and 40 percent of the general, selling, and administrative expenses.
Create an equally weighted portfolio of five computer software stocks. Is such a portfolio a diversified portfolio? What is the beta of the portfolio? What is the expected return of the portfolio?
DNA Company issued $4000000 in 10.5%, 10-year bonds on February 1, 2010, at 104. With semiannual interest payment dates are January 31 and July 31. Apply the straight line method to solve the problem.
compute the book value per share and value of share using dividend discount model.1. calculate the book value per share
what would be the effect on the net present value of the project and what would your selling price have to be to generate a net present value of $150,000 at a 15% discount rate?
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