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You are evaluating a product for your company. You estimate the sales price of product to be $150 per unit and sales volume to be 10,500 units in year 1; 25,500 units in year 2; and 5,500 units in year 3. The project has a 3 year life. Variable costs amount to $75 per unit and fixed costs are $205,000 per year. The project requires an initial investment of $339,000 in assets which will be depreciated straight-line to zero over the 3 year project life. The actual market value of these assets at the end of year 3 is expected to be $45,000. NWC requirements at the beginning of each year will be approximately 15% of the projected sales during the coming year. The tax rate is 35% and the required return on the project is 12%. What will the year 2 cash flows for this project be?
Reasons to invest in marketable securities would not include:
The Omega Venture Group needs to borrow to Finance a project. Repayment of the loan involves payments of $5660 at the end of every six months for six years. No payments are to be made during the development period of two years. Interest is 9% compoun..
You have been asked to value a stock that will not pay a dividend until three years from now. At that time you estimate the dividend will be $1.40. You estimate that it will grow by 10% for the two following years and at 5% thereafter. What would the..
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For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 –$ 162,000 1 54,000 2 85,000 3 69,000 Requirement 1: At a required return of 8 percent, what is the NPV of the project Requirement 2: At a required return of 20 p..
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 9% rate. What is the current v..
If each of the positions below, if you were required to choose two major financial tools to focus on and become expert at, which would you choose? Explain your answers. Support your answers by providing at least one example of why your chosen tools a..
The risk-free rate of return is 5%, the required rate of return on the market is 10%, and High-Flyer stock has a beta coefficient of 1.8. If the dividend per share expected during the coming year, D1, is $2.80 and g= 6%, at what price should a share ..
research a publicly held company of your choice and access the companys web page on the internet to read its most
Based on all of the information above, write an online branding proposal for Premier Portraits. Who specifically should Premier Portraits target with the new branding message? What product should Premier Portraits really offer to this market? What va..
Suppose you know that a company’s stock currently sells for $57 per share and the required return on the stock is 11 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it..
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