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KOL Inc. is considering a 5-year project which requires a $417,000 machine. The CCA rate is 30% and it will be sold for $73,000 when the project ends. The machine is the only asset in the asset class. The project is expected to generate before tax cash ?ows of $285,000 per year for 5 years. The ?rm's target debt-to-equity ratio is 0.8. If the project is ?nanced by all equity, the cost of capital would be 10%. The corporate tax rate is 39%. To ?nance the machine, KOL plans to borrow $285,000 at 4% and to repay one half of the loan at the end of year 2 and the remaining balance at year 5.
A. Using the adjusted present value method, calculate the NPV of the project.
B. Using the weighted average cost of capital method, calculate the NPV of the project.
Consider a porfolio which consists of long position (buy) of 200 European Call options C1, short position (sell) of 100 European Put options P1.Delta(C1) = 0.6, delta(P1) = -0.4, T(C1) =2.2, T(P1) =1.5, vega(C1) = 0.25, vega (P1) = 1.8.
A company has just issued preffere shares which ppay a dividend of 4$ per year. The first dividend to be received will be just a year from today. If the expected rate of return from this stock is 5%, what is the price for this bond?
Grosvenor Industries has designated $1.2 million for capital investment expenditures during the upcoming year. Its cost of capital is 14 percent. Any unused funds will earn the cost of capital rate. The following investment opportunities along wit..
After putting a portion towards paying off existing debts, you have decided to put the rest into investments to help secure your personal financial future.
ponzi corporation has bonds on the market with 12.5 years to maturity a ytm of 7.30 percent and a current price of
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Determine the financial ratios and compare them to industry standards
The Company was granted a Medium Term Loan of USD$5,161,280 by Stanbic Bank Ghana Limited, for general corporate purposes including capital expenditure
The market interest rate for bonds of similar risk and maturity is 10%. Interest is paid semiannually on June 30 and December 31.
Kose, Inc., has a target debt-equity ratio of 0.78. Its WACC is 12 percent, and the tax rate is 33 percent. What is the Pretax cost of debt percentage and cost of equity percentage?
An apartment building can be well represented as producing net rent of $10/SF annually in arrears, with expected annual growth over the long run of negative.
A current market value of $1,214.82. If it pays interest semiannually, then what is the nominal annual pre-tax required rate of return on debt
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