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An auto plant that costs $160 million to build can produce a line of flexfuel cars that will produce cash flows with a present value of $240 million if the line is successful but only $70 million if it is unsuccessful. You believe that the probability of success is only about 40%. You will learn whether the line is successful immediately after building the plant.
Question a-1. Calculate the expected NPV. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place.)
Question a-2. Would you build the plant?
Suppose that the plant can be sold for $110 million to another automaker if the auto line is not successful. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Enter your answers in millions rounded to 1 decimal place.)
Question b-1. Calculate the expected NPV.
Question b-2. Would you build the plant?
XYZ Corporation has a taxable income of 200,000. It pays its entire after-tax income to tis sole shareholder, and individual. Compute the effective tax rate on the $200,000 income if the dividend is taxed at 15%, and if it is taxed at 35%.
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Based upon your own Internet research, identify and comment on two supply-side initiatives included in the current U.S. stimulus package. Ensure your response includes one strength and one weakness in each of these initiatives.
Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered: Product Number of Components Number of Setups Number of Direct Labor Hrs Base 15 20 700 Loaded 25 40 600 Overhea..
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