dr. n. mohamudally 12.00 question 1 normal 0 false false false en-in x-none x-none
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Using a 4.5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer.
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You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $420 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in ..
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Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has $16 million in invested capital, has $2.4 million of EBIT, and is in the 40% federal-plus-state tax bracket. Calculate the return on inve..
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You find a certain stock that had returns of 12.2 percent, –21.1 percent, 27.1 percent, and 18.1 percent for four of the last five years. Assume the average return of the stock over this period was 10.20 percent. What was the stock’s return for the m..
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At the dinner table, your father is extolling the benefits of investing in bonds. He insists that as a conservative investor he will make only investments that are safe, and what could be safer that a bond, especially a U.S Treasury long-term bond? 1..
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Homemade Leverage [LO 1] FCOJ, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 35 percent debt. Currently, there are 5,000 shares outstanding and the price per share is $..
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Last year, Paul invested $38,000 in Oil Town stock, $11,000 in long-term government bonds, and $8,000 in U.S. Treasury bills. Over the course of the year, he earned returns of 12.1 percent, 7.2 percent, and 4.1 percent, respectively. What was the nom..
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A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $589.43. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculat..
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The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $840,000, and it would cost another $24,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depr..
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On July 1, 2010, Bill invested P into a fund which accumulates at an interest rate of 7% compounded monthly. On July 1, 2012, Judy invested 100 in a fund with a discount rate of 9% compounded quarterly. On July 1, 2010, the sum of the present value o..
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At an output level of 48,000 units, you calculate that the degree of operating leverage is 1.40. If output rises to 60,960 units, what will the percentage change in operating cash flow be? (Do not round your intermediate calculations.)
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