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Question: A firm is re-evaluating one of its current product lines to determine whether it will continue to be profitable or whether it should be discontinued. Net operating revenues (sales minus all operating costs) are estimated to be $3 ,000 per year for each of the next 6 years, after which time they will drop to $2,000 per year. It is estimated that the product line has a useful life of 10 years; that is, after year 10 no further revenues are anticipated. If the product line were shut down, it would entail immediate expenses of $4,500. On the other hand, machinery used in the production could be sold for $ 1 2,000. This machinery is part of an asset class for which the applicable rate for CCA is 30 percent. The class is not left empty by the sale of the machinery. The floor space that is vacated by the shutdown could be leased out at $ 1,200 per year. The firm's tax rate is 40 percent, and the appropriate discount rate is 14 percent. Based on a net present-value analysis, should the firm continue operations or close down the product line?
The Wall Street Journal reports that the rate on two year Treasury securities is 2.10% and the rate on four year Treasury securities is 3.05%.
RJR Nabisco, in response to stockholder pressure in 1996, announced a significant increase in dividends paid to stockholders.
Explain your initial impression of the organization based upon your initial review of their corporate website. Analyze their Vision, Mission and Goals in reference to the company's competitive strategy, branding and messaging
Capital Asset Pricing Model (CAPM) is often used to calculate the cost of equity. In deciding the risk free rate of return, you have the following information on treasuries.
A description of the organization and its mission, programs, and services. An outline of a relevant long-range financial planning process
You are the financial manager of a U.S. Company which sold watches to a Belgian company for $5,400,000 when the spot rate of $/€ was 1.0800.
Are there likely to be difficulties in satisfying the needs of all the groups you have considered with one common set of information?
What is the sample proportion ˆp of college students at OSU who worked last summer? What is the approximate distribution of the proportion ˆp of college students at OSU who worked last summer?
Graphically show what happens to the interest rate if the Fed takes action that leads to a decrease in the supply of real money balances while the economy is in a liquidity trap.
When Janet Yellen talks about raising interest rates, the stock market usually drops. Why do you think this happens?
Investors and creditors are typically not interested in the same thing. Investors are typically interested in whether a company is going to turn a profit over time, while a creditor is interested in short-term cash flow. Decide whether you are an ..
1. Discuss the overall purpose people have for investing. Define investment. 2. As a student, are you saving or borrowing? Why?
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