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Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell 15 units per year at $ 430,000 net cash flow per unit for the next five years. The engineering department has come up with the estimate that developing the machine will take a $ 20 million initial investment. The finance department has estimated that a 20 percent discount rate should be used.
What is the base-case NPV? Make sure to show all your work below.
If unsuccessful, after the first year the project can be dismantled and will have an after-tax salvage value of $ 12 million. Also, after the first year, expected cash flows will be revised up to 20 units per year or to 0 units, with equal probability. What is the revised NPV? Make sure to show all your work below.
What is the maximum value of the option described in part (b)? Make sure to show all your work below.
What is the NPV of the lockbox system given the following information?
The plant has an installation cost of $17.8 million, which will be depreciated straight-line to zero over its four-year life.
Your neighbor has gotten into some serious credit card debt,
A bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?
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Identify one liquidity, one solvency, and one profitability ratio, explain how they are calculated, and discuss what each ratio can tell about an organization s performance.
Lourdes Corporation's 15% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years, are callable 3 years from today at $1,025. They sell at a price of $1,247.30, and the yield curve is flat. What is the best estimate of these..
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Steady As She Goes, Inc., will pay a year-end dividend of $3.70 per share. Investors expect the dividend to grow at a rate of 5% indefinitely. If the stock currently sells for $37 per share, what is the expected rate of return on the stock?
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