The goal of this exercise is to explore the trade-offs associated with the NPV of a solar collector project. The QFM for this project is: Development costs are $100K/qtr for Y1. Ramp-Up costs are 10K for Y1 Q4, 50K for Y2 Q1, and 5K for Y2 Q2. How wo..
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You have accumulated some money for your retirement. You are going to withdraw $$99035 every year at the end of the year for the next 24 years. How much money have you accumulated for your retirement? Your account pays 10.87 percent per year, compoun..
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Distinguish between beta (i.e market) risk, within-firm ( i.e,corporate) risk, and stand-alone risk for a potential project. Of the three measures, which is theoretically the most relevant, and why? Suppose a firm estimates its overall cost of capita..
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How are stock issuance costs and direct combination costs treated in a business combination which is accounted for as an acquisition when the subsidiary will retain its incorporation?
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Two investors are evaluating Apple's stock for possible purchase. They agree on the expected value of D1, and on the expected future dividend growth rate. Silverado Mining Company's ore reserves are being depleted, so its sales are falling. Also, bec..
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Goniff Steel has $24,000 in assets, consisting of $1,000,000 of temporary current assets, $2,000,000 of permanent current assets, and $1,200,000 of fixed assets. Short-term interest rates are 8% and long-term interest rates are 12%. If long-term fina..
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A project has an initial cost of 49,000 expected net cash inflow of 13,000 per year for eight years and a cost of capital of 12%. What is the projects payback period?
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You have just purchased a new warehouse. To finance the purchase, you've arranged for a 25-year mortgage for 80 percent of the $1,800,000 purchase price. The monthly payment on this loan will be $10,800. What is the APR?
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Frifeldt Farm just paid a dividend of $1,026, has a total equity of $21,650, total assets of $31,450, and a net income of $3,420. What is the sustainable growth rate?
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Two years ago, Trans-Atlantic Airlines sold $250 million worth of bonds at $1,000 each. These semi-annual bonds had a maturity of 12 years and a coupon rate of 12.5%. Today these bonds are selling for $1,000. Determine the yield-to-maturity.
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Stock has a current price of 40.00, a beta of 1.5, and a dividend yield of 8%. if the treasury bill yield is 6% and the market portfolio is expected to return 19%, what should stock A sell for at the end of an investor's three year horizon?
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Consider the following projects, A and B where the firm can only choose one. Project A costs $30 and has cash flows of $5, 10, 15, 20 in each of the next four years. Project B also costs $30, and generates cash flows of $20, 10, 8, 6 for the next fou..
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