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Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.98 million. The marketing department predicts that sales related to the project will be $2.68 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated down to zero over its four-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 30 percent of sales. Howell also needs to add net working capital of $330,000 immediately. The additional net working capital will be recovered in full at the end of the project’s life. The corporate tax rate is 39 percent. The required rate of return for Howell is 15 percent. What is the value of the NPV for this project?
Quarles Industries had the following operating results for 2015: sales = $27,960; cost of goods sold = $19,360; depreciation expense = $4,940; interest expense = $2,190; dividends paid = $1,050. What is the operating cash flow for 2015? What is the c..
Calculate the expected return of portfolio
A firm earns 10 percent annually on its investments. One possible investment offers $50,000 a year for 10 years and costs $300,000. Should the firm make this investment?
Include profitability, liquidity, leverage, and activity ratios for which you have data available (data may not be available for all ratios - just use what's available in the case). Present your calculations in table format.
It also had accounts payables of $51,369, short-term notes payables of $11,417, and accrued taxes of $6,145 and the net working capital of the firm
Overhead is applied on the basis of machine hours. It takes 3 machine hours to produce a large doll house and 2 machine hours to produce a small doll house. EDHC produces 2,000 large doll houses and 10,000 small doll houses in a year. Total manufactu..
For any two – but no more – of the bond features below, explain whether their presence in a bond contract would make the bonds more attractive or less attractive as an investment relative to bonds that lack the feature but are otherwise identical.
Assume you invest $25,000 into an account with an 11% APR. Interest is compounded monthly. How much will you have in 25 years? How much more is this amount than if you compounded interest yearly? But this time continuously compound the interest?
Mullet Technologies is considering whether or not to refund a $175 million, 13% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $8 million of flotation costs on the 13% bonds over the issue's 30-year life. Mullet's investment b..
You are considering an investment in Keller Corp's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50) has a beta of 0.9. The risk-free rate is 4.6%, and the market risk premium is 5.0%. Keller currently se..
After discovering a new gold vein in the Colorado Mountains, CTT Mining Corporation must decide whether to go ahead and develop the deposit. The most cost-effective method of mining gold is sulphuric acid extraction, a process that results in environ..
Moby DIck Corporation has asales of $4,962,250; income tax of $419,943; the selling, gereral and administrative expenses of $265,339; depreciation of $315,588; cost of goods sold of $2,679,880; and interest expense of $140,493. Calculate the amount o..
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