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NPVs and IRRs for Mutually Exclusive Projects
Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $22,000, whereas the gas-powered truck will cost $17,500. The cost of capital that applies to both investments is 12%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,290 per year and those for the gas-powered truck will be $5,000 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck, and decide which to recommend.
Would a supply chain make sense in regional production as backup facilities to China? For example, having facilities in Europe and South America to become cost effective in competition with Asia should a disaster strike? Explain.
Return on equity to be 13.8 percent. Sales were $979,000, the total debt ratio was 0.42, and total debt was $548,000. What is the return on assets?
Webster & Jones has net income of $49,200, sales of $936,800, a capital intensity ratio of 0.74, and an equity multiplier of 1.5. What is the return on equity?
An investor enters into a short forward contract to sell 100,000 British pounds for US dollars at an exchange rate of 1.4000 US dollars per pound. How much does the investor gain or lose if the exchange rate at the end of the contract is.
Assume the expected return on the market is 13.8% and the risk-free rate is 6.4%. Carib Corporation stock has a beta of 1.2.
The system is expected to generate positive cash flows over the next four years in the amounts of RM350,000 in year one, RM325,000 in year two, RM150,000 in year three, and RM180,000 in year four. DCC's required rate of return is 8%.
The Lo Tech Co. just issued a dividend of $2.30 per share on its common stock. The company is expected to maintain a constant 7 percent growth rate in its dividends indefinitely. If the stock sells for $43.10 a share, what is the company's cost of..
What is the present value of these cash flows?
what is the value per share of your firm's stock? Round your answer to the nearest cent. Do not round your intermediate computations.
Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should be actually selected?
Compute cost of retained earnings and common equity and WACC and What is the minimum cash flow per year this project should generate over the next four years to be accepted by the company
Risk management relates to decreasing cost of risk, meaning reducing cost of the actual management of risk. People invest their money, whether it's in bonds or stocks,
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