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With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home. With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 7,200 in the first year, with growth of 6 percent each year for the following four years (Years 2 through 5). Production of these lamps will require $37,000 in networking capital to start. Total fixed costs are $97,000 per year, variable production costs are $15 per unit, and the units are priced at $45 each. The equipment needed to begin production will cost $177,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 38 percent, and the required rate of return is 30 percent. What is the NPV of this project?
Annuity Payment and EAR You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 6%, with interest paid monthly. What is the monthly loan payment..
Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 13.0% and 15.0%, respectively. If you currently hold a market index portfolio, what would be the alpha for Portfolios A and B?
Explain what is meant by the net present value of an investment and discuss how the use of the NPV as an investment decision rule is related to the objectives of the company - Discuss the advantages and disadvantages of the use of the internal rate..
Venus, Inc. wishes to evaluate a proposed merger into the Mars, Inc. Venus had 2012 earnings of $250,000, has 100,000 shares of common stock outstanding, and expects earnings to grow at an annual rate of 9%. Calculate the expected earnings per share ..
Essary Enterprises has bonds on the market making annual payments, with seven years to maturity, a par value of $1,000, and selling for $950. At this price, the bonds yield 6 percent. What must the coupon rate be on the bonds?
Calculate the gross earning for an apple picker based on the following differential pay scale: (Round your answer to the nearest cent.) 1-1,000:$0.03 each 1,001 - 1,600 ; $0.05 each over 1,600 : $0.07 each apple picker rice number of apples picked 1,..
What is the expected payout that the company can expect from insuring these two?
(Cost of debt) Temple-Midland, Inc. is issuing a $1,000 par value bond that pays 8.1 percent annual interest and matures in 15 years. Investors are willing to pay $953 for the bond and Temple faces a tax rate of 25percent. What is Temple's after-tax ..
Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 mi..
Mark makes his first deposit of $1500 into a Roth IRA earning 6.5% interest compounded annually at age 36. He continues to make an annual deposit of $1500 until he is 60 (25 deposits in all). The Smith’s family takes out a 30-year mortgage at 4.25% c..
What was your dollar return on this investment?
Electronic Products has 35,000 bonds outstanding that are currently quoted at 102.3. The bonds mature in 11 years and carry a 9 percent annual coupon. What is the firm's aftertax cost of debt if the applicable tax rate is 30 percent?
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