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In the spring of 2015, Jemison Electric was considering an investment in a new distribution center. Jemison's CFO anticipates additional earnings before interest and taxes (EBIT) of $100,000 for the first year of operation of the center, and, over the next five years, the firm estimates that this amount will grow at a rate of 5% per year. The distribution center will require an initial investment of $400,000 that will be depreciated over a five-year period toward a zero salvage value using straight-line depreciation of $80,000 per year. Jemison's CFO estimates that the distribution center will need additional net working capital equal to 20% of new EBIT
Assuming the firm faces a 30% tax rate; calculate the project's annual project free cash flow (FCF) for each of the next five years where the salvage value of operating networking capital and fixed assets is assumed to equal their book values, respectively. ANSWER BY COMPLETING CHART BELOW. SHOW ALL WORK.
As the basis of your Play Money Paper, you are to pick your stocks this week and submit them here in the week 5 discussion conference to get everyone's feedback. In addition, you must provide a brief explanation for each of your investments and the ..
Assume an after-tax saving interest rate of 6 percent and a tax rate of 28 percent.
With this type of proforma method, we look ahead on our balance sheet for large, incremental changes such as the expansion of a new factory. In this fashion, we are able to identify financing needs
Assume the following information concerning two stocks that make up an index. What is the value-weighted return for the index? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in y..
NetFive Inc. is considering a leasing arrangement to finance some manufacturing equipment’s that is need for the next 3 years. The equipment’s will be obsolete and worthless after3 years. The firm will depreciate the cost of the equipment’s on the st..
You wrote ten call option contracts on JIG stock with a strike price of $41 and an option price of $.60. What is your net gain or loss on this investment if the price of JIG is $46.05 on the option expiration date?
What are the differences between a micro hedge and a macro hedge for an FI? Why is it generally more efficient for FIs to employ a macro hedge than a series of micro hedges?
Statement of retained earnings Hayes Enterprises began 2015 with a retained earnings balance of $928,000. During 2015, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. Prepare a statement ..
Which of these should cause the dollar to appreciate?
In estimating the future equity risk premium, it is important to include assumptions about:
A credit card is offered with monthly payments and a 21.99% APR. What is the loan's effective annual rate (EAR)?
The current spot rate is C$1.379 and the one-year forward rate is C$1.319. The nominal risk-free rate in Canada is 4 percent while it is 8 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you wou..
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