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Consider a project with the following information:
The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $20,000 cash and borrow $80,000 at 6% with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project. There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the firm will sell 25,000 units of product at $5; variable costs are $3; there are no fixed costs. The firm is subject to a 34% corporation tax rate.
The cost of equity for unlevered (ungeared) firm Ku (rasset) is 12%.
Cost of debt (rdebt) and cost of equity (requity) are 6% and 27.84% respectively.
Compute base case NPV, PV of depreciation tax shield, PV of interest tax shield, and the APV of the project.
Interpret funds acquisition alternatives available to management and related risks. Compose recommendations on minimizing risk of acquisition of funds.
What is an estimate of the firm's cost of common from retained earnings?
You have already made an investment into a project. This project is expected to earn you $500 at the end of the first year, $600
A company faces financial pressures from attempting to increase too rapidly. Which of the following ratios would you expect to be impacted the most by these pressures?
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Scampini Technologies is expected to generate $75 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year.
To offer a substitute for a balloon angioplasty to treat heart blockages, the experimental laser was developed at a cost of $250,000.
the aif company issued a 10-year bond at par f 1000 that pays a coupon of 11 on an annual basis and is callable at
Customers arrive for a service at a rate of 100 an hour and each server can deal with 15 customers an hour. If customer time is valued at $20 an hour and server time costs $50 an hour, how can you identify the best number of servers?
The bonds have a 4 percent coupon rate, payable semiannually, and a par value of $1,000. They mature on January 1, 2015.
During that time, you received $1 per year dividend. What is your dividend yield, capital gains yield and total yield?
Jamie Drout is interested in perceptions of gender stereotypes within beauty product advertising, which includes soap, deodorant, shampoo, conditioner, lotion, perfume, cologne, makeup, chemical hair color, razors, skin care, feminine care, and sa..
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