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Imagine you are a representative of management in the company you have selected for your Week 6 Assignment and you must make a capital budgeting decision. The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year's profits. You are charged with describing the important considerations in the decision-making process to upper management. In your response, be sure to include the following:
A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.
An explanation of how these factors are significant to the company.
A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.
A calculation of the proposed return on investment based on criteria you select and justification for that ROI.
Assume that there are two three-year bonds with face values equaling $1000. The coupon rate of bond A is .05 and .08 for bond B. A third bond C also exists, with a maturity of two years. Bond C has a face value of $1000; it has a coupon rate of 11%. ..
The firm's total capital is $140 million and it finances with only debt and common equity. What is its debt-to-capital ratio?
Explain the potential advantage to a company of changing a weekly payroll to a bi-weekly payroll.
Determine the sum of all interest payments.
Today, Jackson's Inc. is investing $349,000 in some new equipment. The company expects the cash flows to increase by $72,000 a year for the next three years and $98,000 a year for the following four years as a result of this investment. How long must..
Consider a taxable bond with a yield of 11% and a tax exempt municipal bond with a yield of 6.2%. At what tax rate would you be indifferent between the two bonds?
LLT Company’s stock is currently selling for $105 per share. LLT just paid its annual dividend, so the next one won’t be paid until one year from today. If you required an annual rate of return of 15% on an investment in LLT’s common stock, what amou..
Whited Inc.'s stock currently sells for $35.25 per share.- What is the stock's expected price 5 years from now?
What is the net present value (NPV) of this decision if the cost of capital is 8%?
Examine the functions and operations of investment banks. Describe how investment bank services differ from commercial bank services. Why do investment banks sometimes form international syndicates? What do investments banks “sell high globally”?
7 years ago, Delicious Mills, Inc. issued 30-year to maturity bonds that had a 10.17 percent annual coupon rate, paid semiannually. The bonds had a $1,000 face value. Since then, interest rates in general have changed and the yield to maturity on the..
The present price of a stock is 50. The market value of a European call with strike 47:5 and maturity 180 days is 4:375.
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