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XYZ Corporation is considering an expansion project. To date they have spent $62,600 investigating the viability of the project and have decided to proceed. The CEO of XYZ spent $17,800 last year on his business trip to New York where he discussed about the proposed new project with the board members. The company spent $51,000 on a marketing study before its current analysis regarding whether to accept or reject the project. The proposed project will cost $600,000.00. The project will be depreciated over a 3 year MACRS class life. XYX would use the 3-year MACRS method to depreciate the machine and equipment which are 33.33%, 44.45%, 14.81%, and 7.41%. If the project is undertaken the company will need to increase its inventories by $30,800, and its accounts payable will rise by $7,900. The company will realize an additional $560,450.00 in sales over each of the next three years. The company’s operating costs (not including depreciation) will increase by $282,886.00 a year. Both sales and the operating cost are expected to grow 6.50% annually during the life of the project. The company’s tax rate is 35.00%. At t = 3, the project’s economic life is complete, but it will have a salvage value (before-tax) of $95,500.00 after three years. The project’s WACC is 16.25%. What is the project’s net present value (NPV)
Perpetuity of $4,500 per year beginning today is said to offer a 13% interest rate. What is its present value?
Assuming that the average ice cream store has a life of about 10 years, what is the NPV of opening a new store if the required rate of return in this business is 10%? You may assume that the $250,000 in initial inventory will be recovered at the end ..
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Erin McQueen purchased 50 shares of BMW, a German stock traded on the Frankfurt Exchange, for 64.5 euros (€) per share exactly 1 year ago when the exchange rate was 0.67 €/US$. Today the stock is trading at 71.8 (€) per share, and the exchange rate i..
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Cyberco Corporation has 5 million shares of stock outstanding. Cyberco's after-tax profits are $15 million and the corporation's stock is selling at a price-earnings multiple of 10, for a stock price of $30 per share. Calculate Cyberco's earnings per..
The treasurer of a U.S company has $1,000,000 to invest for 30 days. A 30-day euro deposit yields 2.00 percent. The present exchange rate of € is $1.1550. What is the annualized yield on the dollar deposit in the euro market if the exchange rate of €..
Thirsty Cactus Corp just paid a dividend of 1.60 per share. The dividends are expected to grow at 25 percent for the next 7 years and then level off to a 6 percent growth rate indefinitely. format to 4 decimal places. Required: If the required return..
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