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1. The Mini-Max Company has the following cost information on its new prospective project:
Initial investment: $700 Fixed costs: $ 200 per year
Variable costs: $ 3 per unit Depreciation: $ 140 per year
Price: $8 per unit Discount rate: 12 percent
Project life: Three years Tax rate: 34 percent
Assume that it sells the machine for book value at the end of Year 3 so there is no capital gain or loss on the initial investment. How many units per year does it have to sell to break even from an NPV standpoint?
2. You have been asked to evaluate an infinitely lived project. The project has a cost of $100. There is no depreciation. The project has sales of $100 per year forever. The operating expenses will be $54 the first year and will increase by 8 percent every year. The corporate tax rate is 30 percent, and the opportunity cost of capital is 10 percent. The project can be abandoned at any time. Assume that the cost of abandoning the project is equal to zero. When would it make sense to abandon the project? Calculate the value of the option to abandon the project. (Hint: The value of the option to abandon is equal to the NPV of the project with the option minus the NPV of the project without the option.)
Calculate the present value of receiving $500 per year, with certainty, at the end of the next five years. To find the rates for the missing years in the table.
If a stock's market price exceeds its intrinsic value as seen by the marginal investor, the the investor will sell the stock until its price has fallen down to the level of the investor's estimate of the intrinsic value.
What is the project NPV
Analyze the goals do not just list it them but put explaining - Explain the company competitive positioning and cooperative strategies
This will require integrating the major concepts they may include merging, acquiring, divesting, outsourcing, offering a new product or service
cost of internal equity pathos co.s common stock is currently selling for s23.80. dividends paid last year were 0.70.
Explain the advantages and disadvantages of each approach. Which approach would you recommend using to determine salesforce size? Why?
Your boss, the chief executive officer (CEO), realizes that you do not have much practice in this higher level, decision-making process and has asked you to write a memo describing your understanding of how to make important decisions.
The Family Practice Clinic has long-term debt of 567,000 dollar as of December 31, 2009 determine the equivalent value of long-term debt in 2005.
Computation on selection of Portfolio and A portfolio manager has been asked to construct and manage a portfolio with a capital appreciation objective
What equal annual deposits must you make each year to reach your retirement goal?
Which one of the following accurately defines a perpetuity?
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