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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.)
What situation would you use preferred and convertible instruments as investments in? Why?
Accounts receivable at the beginning of the year are $1,900. The company has a 45-day collection period. Calculate cash collections in each of the four quarter.
1. Define and explain corporate negligence. 2. What does the Safe Harbor Act Regulate? 3. What are the major provisions of the Sarbanes Oxley Act
What are the incremental net cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest whole dollar.
Based on the given information, compute the monthly total cost for your cash collection system if your firm's opportunity investment rate is 4% and your bank
your company inc. wants to do business with my company llc. because our companies are both savvy they would like to
The firm's beta is .90. The riskfree rate of return is 10%. The market rate of return is 16%. Calculate the cost of long-term debt.
A firm's balance sheet shows current assets of $410, net fixed assets of $685, long-term debt of $320, and owners' equity of $590. What is the value of the firm's current liabilites?
If the actual spread for this issue is 45 bp, on April 1, 2017, will the bondholder be made whole, less than whole, or more than whole?
Based on your answer to the previous question, what are two reasons why managers often emphasize short-term earnings
Cindy's marginal tax rate is 20%. This $1600 medical expense is equivalent to how much of Cindy's pre-tax earning? (to the nearest dollar)
What would be the approximate maturity for such an investment on a simple interest basis?
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