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The cafeteria you operate has a regular clientele for all three meals, seven days a week. You want to expand your product line beyond what you are currently able to offer. To do so requires the purchase of some additional specialty equipment costing $45,000, but you project a resultant increase in sales (after deducting the cost of sales) of about $8,000 per year for each of the next eight years with this new equipment. Assuming a required rate of return (i.e., a hurdle rate) of 8%, should you pursue this opportunity? Why or why not? Do the analysis under two conditions:
a. You are part of an income-tax-exempt enterprise.
b. The enterprise you are part of is subject to a 40% corporate income tax rate, and the straight-line, depreciable life of the equipment you are contemplating purchasing is five years.
TBC paid its first dividend of $2 per share in the third year to its common shareholders. What is the market value added, MVA, for TBC Corp.?
Under the assumption that you expect the yields to maturity ?on each bond to be 7% at the beginning of next year.
consider a 30-year mortgage at an interest rate of 12 compounded monthly with a 900 monthly payment. what is the total
neverlate is world famous for its precision pocket watches. the company has estimated that variable manufacturing costs
What will her investment in Alpha be worth if the company declares a 4-for-3 stock split?
A company's perpetual preferred stockcurrently trades at $80 per share and pays a $6.00 annual dividendper share. If the company were to sell a new preferred issue,it would incur a flotation cost of 4%. What would the cost of that capital be?
Chris wants to purchase an apartment within five years (refer Case Study). Undertake a financial assessment of this objective and comment on whether or not it i
Question 1: What is the first year dividend? (sample answer: $2.50) Question 2: What is the horizon, or terminal value? (sample answer: $25.45)
Suppose a company raises funds by issuing short-term bonds. - Such a firm is called a finance company. Is a finance company a type of bank?
Two mortgage options are available: a 15-year fixed-rate loan at 6% with no discount points, and a 15-year fixed-rate loan at 5.75% with 1 discount point. Assuming you will not pay off the loan early, which alternative is best for you? Assume a $100,..
If the overall costs of leasing this equipment or borrowing money to buy it are roughly the same, which financing method would you choose? Why?
Synthesizing For one week, keep a list of all taxes you hear or read about in the news media or pay in your community. Classify your journal entries into three.
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