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We are evaluating a project that costs $1, 694,000, has a seven-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, 700 units per year. Price per un is $35.10, variable cost per unit is $21.35, and fixed costs are $767,000 per year. The tax rate is 40 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within plusormius 10 percent. Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars, e.g. 1, 234, 567. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16)
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table
Bond X is a premium bond making annual payments. The bond has a coupon rate of 8.9 percent, a YTM of 6.9 percent, and has 14 years to maturity. Bond Y is a discount bond making annual payments. What do you expect the prices of these bonds to be in 12..
Broadly speaking, what was the average risk of cash, bonds, and stocks? - What time period are your numbers from?
Compaq Computer has a £1 million receivable that is expects to collect in one year. Suppose the interest rate on the pound is 2.0% and the interest rate on the US dollar is 4%. If the currency exchange rate is $1.50/£, what value could Compaq lock in..
Consider the following cash flow pattern. In year zero: capital expense = $100,000; year 1 cash inflow = $25,000; year 2 cash inflow = $10,000; year 3 cash inflow = $50,000; year 4 cash inflow = $60,000. annuity and a conventional cash flow. mixed st..
Determine the maximum price he or she should be willing to pay to purchase Honeywell call options having an exercise price of $45 and expiring in 156 days.
A certain fluidized-bed combustion vessel has an investment cost of $110,000, a life for 10 years, and negligible market (resale) value. Annual costs of materials, maintenance, and electric power for the vessel are expected to total $11,000.
A department store wants to know what fraction of its customers in a certain market have store credit cards, and what their average balance might be. Find 98% confidence intervals for the proportion with credit cards and for the average balance.
The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm?
You are the manager of 10 people in a large organization. Everyone becomes very suspicious and upset when they receive a memo from the HR department saying their jobs are going to ve evaluated. What will you do in response to their concerns? (Give Ci..
Calculate the expected NPV for both projects. - Calculate the variance and standard deviation of the NPVs for both projects. Which project appears to be riskier?
You have $208 thousand to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.05 percent, and Stock L, with an expected return of 10.22 percent. If your goal is to create a portfolio with an expected return of 12.99 p..
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