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We are evaluating a project that costs $956,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 88,400 units per year. Price per unit is $34.95, variable cost per unit is $21.20, and fixed costs are $764,000 per year. The tax rate is 40 percent, and we require a return of 13 percent on this project. Calculate the base-case operating cash flow and NPV. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Base-case operating cash flow $ 366500 NPV $ What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) Sensitivity of NPV $ 24.54 If there is a 500-unit decrease in projected sales, how much would the NPV drop? (Input your answer as a positive value. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV drop $ What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Sensitivity of OCF $ -53040 If there is $1 decrease in estimated variable costs, how much would the increase in OCF be? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Increase in OCF $.
If the nominal rate is 7.8 percent convertible quarterly and the present value of the investment now is 17600 dollars, how large is the first payment?
A company has just paid a dividend of $ 2 per share, D0=$ 2. What is your estimate of the stock's current price?
Backwater Corp. has 8 percent coupon bonds making SEMIANNUAL payments with a YTM of 7.2 percent and selling at $1060. How many years for these bonds have lefts until they mature?
Erna Corp. has 8 million shares of common stock outstanding. The current share price is $73, and the book value per share is $7. Erna Corp. also has two bond issues outstanding. Suppose the most recent dividend was $4.10 and the dividend growth rate ..
Neal Enterprises has no debt. Its current total value is $74 million. Assume debt proceeds are used to repurchase equity. Ignoring taxes, what will the company’s value be if it sells $34 million in debt? Suppose now that the company’s tax rate is 35 ..
Crissie just won the lottery, and she must choose between three award options. She can elect to receive a lump sum today of $60 million, to receive 10 end-of-year payments of $9.3 million, or 30 end-of-year payments of $5.3 million. If she expects to..
The risk-free rate of return is 8%, the required rate of return on the market is 13%, and High-Flyer stock has a beta coefficient of 2.4. If the dividend per share expected during the coming year, D1, is $4.50 and g = 6%, at what price should a share..
New Hope Managed Care Inc., is a for-profit managed care company that serves the southwest United States. Last year, it reported $1,200,000 in income from operations, $250,000 in interest income from bonds it bought in the previous year, and $60,000 ..
Calculate the accounting break-even point. Calculate the NPV breakeven annual cash flow for the project.
Which one of the following is not among the characteristics of an economy whose currency is considered a global reserve currency?
NYY corp., a calendar year firm, sold equipment to Red Sox nation Inc. on Jan 1, 2010 and received in return a note, due on Dec 31, 2013, with a face value of $1,000,000, and bearing interest at a standard rate of 3% per year. What us the definition ..
Your firm is considering leasing a new robotic milling control system. The lease lasts for 4 years. The lease calls for 5 payments of $280,000 per year with the first payment occurring at lease inception. The firm can borrow at 10%, and the corporate..
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