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1. Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated straight-line to zero over its 3 year tax life, after which time it will be worthless. The project is estimated to generate 2.19 million in annual sales, with costs of $815k,. If tax rate is 35%, what is the OCF for this project?
2. In the previous problem, suppose the required return on the project is 12%, what is the project's npv?
3. In the previous problem, suppose the project requires an initial investment in net working capital of $300k, and the fixed asset will have a market value of $210k at the end of the project. What is the project's Year 0 net cash flow now? Year 2? Year 3? What is the new NPV?
To finance some manufacturing tools it needs for the next 4 years, Waldrop Corporation is considering a leasing arrangement. Waldrop Corporation has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual ..
Thomas is considering the purchase of two different annuities. The first begins in three years and pays $1,000 per year for five years. The second begins in 10 years and pays $2,500 per year for seven years.
respond to one selected question giving real-world examples to support all your answers.what does duration measure and
E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $29 in perpetuity, beginning 18 years from now. If the market requires a return of 4.3 percent on this investment, how much does a share of preferred stock cost..
These are the forecasts of revenues over the lifetime of a project of 5 years. Assume all cash flows occur at the end of the year. What is the IRR of the project?
You are considering an investment contract that pays equal $15,000 amounts at the end of each of the next 20 years. If you require an effective annual return of 7 percent on this investment, how much will you pay for the contract today?
David runs a stop sign and causes a serious auto accident, badly injuring two people. The injured parties win lawsuits against him for $30,000 each.
Subprime loans have higher loss rates than many other types of loans. Explain why lenders offer subprime loans. Describe the characteristics of the typical borrower in a subprime consumer loan.
Consider the concepts of break-even and profit-loss analysis. Define fixed and variable costs. Now provide real life examples as to each of the costs.
Malko Enterprises’ bonds currently sell for $1,050. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?
James McCulloch purchased a 20-year U.S. Treasury bond four years ago for $8,500. The bond paid 3.500 percent annual interest. Four years later he sold the bond for $8,580. What is the annual interest amount for the bond? What is the total interest M..
Bob bought some land costing $16,190. Today, that same land is valued at $46,417. How long has Bob owned this land if the price of land has been increasing at 4 percent per year?
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