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Your company has been doing well, reaching $1 million in annual earnings, and is considering launching anew product. Designing the new product has already cost $500,000. The company estimates that it will sell800,000 units per year for $3 per unit with fixed costs of $300,000 per year and variable costs of $2 per unit.Production will end after year 5. New equipment costing $2 million will be required. The equipment will bedepreciated using the 7-year MACRS schedule. You expect to be able to sell the equipment for $200,000 atthe end of year 5. Your current level of working capital is $300,000. The new product will require the workingcapital to increase to a level of $380,000 immediately. Then working capital requirements will be $400,000in year 1, $420,000 in year 2, $450,000 in year 3, $390,000 in year 4, and finally returning to $300,000 atthen end of the project. Your tax rate is 35%. The discount rate for this project is 10%.Do the capital budgeting analysis for this project and calculate its NPV and IRR.
Ziggs corporation will pay a $4.60 per share dividend next year. the company pledges to increase its dividend by 6.75 percent per year, indefinitely if you require a 11 percent return on your investment.
mary ott hotels wants to determine the minimum cost of capital point for the firm. assume it is considering the
Consider the following probability distribution of returns estimated for a proposed project that involves a new ultrasound machine.
Suppose that the current spot exchange rate is USD/SKR6.25 and the three-month forward exchange rate is USD/SKR6.28. The three-month interest rate is 5.6% per annum in the U.S. and 8.8% per annum in Sweden.
1.we typically claim that stock prices are equal to the present value of their payoffs. what dynamics in the real world
Problem 1: Prepare in good form an income statement for Franklin Kite Co, Inc. Take your calculations all the way to computing earnings per share.
develop a well-written researched paper. your paper should address one of the topics listed below. as an alternative
Project XYZ requires an investment in equipment of $600,000 to replace existing equipment. The existing equipment will produce after-tax salvage value of $70,000. Net working capital requirements are increased by $50,000. What is the total cash ou..
suppose that you manage a fund with an expected rate of return of 12.5 and a standard deviation of 18. the t-bill rate
Since global marketing is affected by economic considerations, a scan of the global marketplace should include this factor:
What is the cost of common stock?
Compare long-term instruments and short-term risks, in terms of the various types of risk to which investors are exposed. Explain your answers.
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