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Poltsamaa Felix, an exclusive Estonian wine producer, is considering the purchase of 10,000 French oak barrels at a cost of 900 eur each. The investment into barrels is considered a capital expense and would be depreciated straight line over 5 years.
After 4 years, the barrels will be useless for making fine wine, but they expect to be able to sell them for 3 million eur to Gallo. The increase in the quality of its sweet apple line of wines due to the use of the new French oak barrels is expected to increase revenue by 7 million eur (only) in years 3 and 4. The barrels would have no influence on COGS, SG&A, other operating expenses. The additional working capital investment is 10% of the additional sales revenues and is fully recovered when the project ends (in four years). The tax rate is 40% (profits are taxed), and the required return is 12%.
a) Construct the capital budget
b) Evaluate the project on the basis of NPV and MIRR.
A small business owner visits his bank to ask for a loan. how much would it be willing to lend the business owner?
Briefly explain what theoretical effects that the introduction of quantitative easing has had on the pricing of both call and put options?
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tom owns an independent bookstore located in philadelphia. tom has to decide on the best order quantity for a new
According to the constant growth model for firms that pay dividends, the dividend yield equals:
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Oil Company has purchased production facilities for $2 million and has put them into service. Calculate the declining-balance depreciation (200% declining balance) for a five-year depreciation life.
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User chargers link funds produced to particular public services-individuals pay only for the services they actually use. Why doesn't all government funding come from such freewill transactions and market exchange?
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