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Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $179,000. In addition, Austin estimates that the new machine will increase the company’s annual net cash inflows by $22,000. The machine will have a 12-year useful life and no salvage value. a. Calculate the cash payback period. b. Calculate the machine’s internal rate of return. c. Calculate the machine’s net present value using a discount rate of 8%. d. Calculate the machine’s annual rate of return. (Hint: You will need to calculate Net Income from the Net Annual Cash Flow amount that is given in the problem). 2. Cepeda Manufacturing Company is considering a new project that requires an equipment investment of $22,000. The project will last for 3 years and produce the following cash inflows. Year 1 $7,000 Year 2 $9,000 Year 3 $15,000 Compute the net present value of this project assuming a discount rate of 12%.
Determine the current yield on a corporate bond investment that has a face value of $1060, pays 9 percent, and has a current price of $1220.
What is the market value of the stock after the rights offering? What is your total investment in the firm after the rights offering?
Stoneworth Paving Company specializes in highway paving jobs for state of Virginia. When the State first awarded Stoneworth the contract, they stipulated a 1% penalty for each week Stoneworth was late on a completion date. If you were Preston, what c..
Bond A has 4 years left to maturity and Bond B has 8 years left to maturity. They both have a 6% coupon rate, pays semi annually, and yield is 5%. Calculate the percentage change in each bond if interest rates suddenly increased by 2%.
A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast growing craft beer industry. Your projected sales in the first year are 8300 kegs. Your projected growth rate is 5 percent. What is t..
What are strategic alliances? What types of strategic alliances are there for MNC executives to consider? What is a joint venture?
A used machine costs $20,000 to purchase. It has an annual maintenance cost of $20,000, a salvage value of $5,000, and a 10-year life. If the interest rate is 10% per year, compounded annually, what is the present-worth cost of the machine? Please sh..
How might (a) seasonal factors and (b) different growth rates distort a comparative ratio analysis? Give some examples. How might these problems be alleviated?
How does staging of new venture investments create value for the entrepreneur? What about for the investor. Briefly discuss the Istanbul Stock Market.
Anderson, Inc. is considering a project with an initial cost of $35,000. The project will produce cash inflows of $10,000 a year for the first year and $13,000 a year for the following six years. What is the payback period?
You own a stock that has an expected return of 13.6% and a beta of 1.3. The U.S. Treasury bill is yielding 4.2% and the inflation rate is 3.8%. What is the expected rate of return on the market?
An investment that pays the same amount at the end of each year for a fixed amount of time is called __________. A. an annuity due B. a perpetuity C. an excess cash flow D. an ordinary annuity
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