Fundamental bond analysis would lead an investor

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Reference no: EM131998249

1. Fundamental bond analysis would lead an investor to

(a) buy a bond before a rating upgrade.

(b) sell a bond before a rating upgrade.

(d) buy a bond before a rating downgrade.

(e) ignore bond ratings.

2. Summer Tyme, Inc., is considering a new 5-year expansion project that requires an initial fixed asset investment of $4.536 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worthless. The project is estimated to generate $4,032,000 in annual sales, with costs of $1,612,800.

Required:

If the tax rate is 32 percent, what is the OCF for this project?

Options:

$1,935,360

$2,032,128

$2,419,200

$1,838,592

$1,028,160

Reference no: EM131998249

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