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After spending $ 10 comma 600 $10,600 on? client-development, you have just been offered a big production contract by a new client. The contract will add $ 192 comma 000 $192,000 to your revenues for each of the next five years and it will cost you $ 101 comma 000 $101,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully? depreciated, but could be sold for $ 55 comma 000 $55,000 now. If you use it in the? project, it will be worthless at the end of the project. You will buy new equipment valued at $ 33 comma 000 $33,000 and use the? 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $ 83 comma 000 $83,000 per year. Since she is busy with ongoing? projects, you are planning to hire an assistant at $ 36 comma 000 $36,000 per year to help with the expansion. You will have to immediately increase your inventory from $ 20 comma 000 $20,000 to $ 30 comma 000 $30,000. It will return to $ 20 comma 000 $20,000 at the end of the project. Your? company's tax rate is 35 % 35% and your discount rate is 15.8 % 15.8%. What is the NPV of the? contract? Note?: Assume that the equipment is put into use in year 1. Calculate the free cash flows? below: ?(Round to the nearest? dollar.) Year 0 Sales $ - Cost of Goods Sold $ Gross Profit $ - Annual Cost $ - Depreciation $ EBIT $ - Tax $ Incremental Earnings $ + Depreciation $ - Incremental Working Capital $ - Opportunity Cost $ - Capital Investment $ Incremental Free Cash Flow $
The Frush Corporation has two different bonds currently outstanding. What is the current price of Bond M and Bond N?
You could earn 5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2008 –15.13 % –25.5 % 2 % 2009 25.1 19.6 4 20..
Suppose the spot and three-month forward rates for the yen are ¥79.10 and ¥78.56, respectively. What would you estimate is the difference between the annual inflation rates of the United States and Japan?
Dundee Company has a total value of $74 million. Its stock sells at $32 a share. At present, it has a loan of $10 million at 8% interest. It needs $3 million in additional capital. The expected EBIT after the new financing is $6 million, with a stand..
Compute the future value of $2,000 compounded annually for 20 years at 4 percent. Compute the future value of $2,000 compounded annually for 15 years at 10 percent.
What is the value of this stock at the beginning of 2013 when the required return is 15.6 percent?
Over the past five years, a stock produced returns of 14%, 22%, -16%, 2%, and 10%. What is the probability that an investor in this stock will NOT lose more than 8% nor earn more than 21% in any one given year?
You have been asked to perform a stock valuation prior to the annual shareholders meeting next week. The two models you’ve selected to value the firm are 1) the dividend discount model and 2) the discounted cash flow model. Explain why the estimates ..
What is budgeting? Outline the advantages of budgeting and explain in detail why a master budget is important for the running of an effective business operation
Latcher's Inc. is relatively new firm that is still in a period of rapid development.
Which of the following is not part of the underwriting process?
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