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We are evaluating a project that costs $864,000. Has an eight-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 71,000 units per year. Price per unit is $49, a variable cost per unit is $33, and fixed costs are $765,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on project.
Calculate the accounting break-even point
Calculate the base case cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure?
What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs.
In the previous problem. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within + 10 percent. Calculate the best case and worst-case NPV figures.
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $1.47 million in anticipation of using it as a..
equity valuation and acquisition opportunities at conglomeratoconglomerato is a holding company which currently has a
Carson Corporation stock sells for $59 per share, and you've decided to purchase as many shares as you possibly can. You have $39,000 available to invest. What is the maximum number of shares you can buy if the initial margin is 60 percent?
A company has a 12% WACC and is considering two mutually exclusive investment (that cannot be repeated) with the following cas flows: What is each project's NPV ? What is each project's IRR ?
You are considering buying a house for $200,000. You have $40,000 in your bank account which pays 1% APR compounded monthly. If you contribute 10% of the price of the house as a down payment, the terms of your mortgage will be an original balance of ..
You are considering buying a 2012 Honda Civic that costs $15,000. You have arranged to finance $10,000 of the purchase price by borrowing money from your bank. According to the loan agreement, the interest is 6%, compounded monthly, and you must make..
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $6.2 million, and the 2015 balance sheet showed long-term debt of $6.4 million. The 2015 income statement showed an interest expense of $215,000. What was the firm’s 20..
Your parents will retire in 14 years. They currently have $300,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?
Herm Mueller has invested in a fund that will provide him a cash flow of $11,700 at the end of each of the next 20 years. If the interest rate is 8.5 percent, what is the present value of these cash flows?
Calculate the holding period return and calculate the required return based o the CAPM - calculate the coefficient of variation
what is the financial conditionds of the casino industry and What financial opportunities do exist in the casino industry
A good rule of thumb for getting time shifting to work out right is. The sum of the N and the exponenent should equal the last time period you see in the sequence.
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