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Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $148.17 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for the entire expansion project. Management has decided to save $540,000 a month for this purpose. The firm earns 6 percent compounded monthly on the funds it saves. How long does the company have to wait before expanding its operations? (Do not round intermediate calculations.)
173.17 months
225.12 months
137.20 months
170.80 months
274.39 months
Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 4% and the market risk premium is 6%. Van Buren currently expects to pay a year-end dividend of $2.40 a share (D1 = $2.40). Van Buren..
You find that the bid and ask prices for a stock are $14.25 and $15.45, respectively. If you purchase or sell the stock, you must pay a flat commission of $30. If you buy 100 shares of the stock and immediately sell them, what is your total implied a..
What additional risks will the company face as a result of the proposed international sales? b. What happens to the company's profits if the U.S. dollar strengthens? What if the U.S. dollar weakens?
The City of Sinasonville operated a motor pool fund as an internal service fund. A loan of $500,000 was made from an enterprise fund, to be repaid over 10 years with no interest. Capital assets were purchased as follows: A budget is prepared to break..
The Wall Street Journal reports that the yield on a nine-month Treasury bond is 2.3 percent, the yield on a three-year Treasury bond is 2.9 percent, and the yield on a 10-year Treasury bond is 4.3 percent. Although no liquidity premium is associated ..
In a market, the equilibrium condition is given by the following: Suppose that there is a tax of $1 per unit, and the elasticity of supply is 3 and the elasticity of demand is 2 (in absolute value). How much of the $1 tax is paid by sellers? Which of..
Assume that most investors put together a well-diversified portfolio, and mangers manage in the interest of the well diversified shareholder. Should the manager be more interested in the diversifiable risk or non-diversifiable risk a project brings t..
The current exchange rate between French franc and US dollar is FF 5.529 per dollar. Last month this rate was FF 5.491 per dollar. a) FF has appreciated b) US $ has depreciation c) FF has depreciated d) US $ has appreciated
You just won a very special kind of lottery. Instead of receiving a large lump sum now, for tax reasons this lottery makes equal yearly payments of $ 5,760 for the rest of your life! The only catch is that you have to wait 2 years for the first payme..
Green Co. just paid dividend of $1.50 per share. The company predicts that the dividend will increase 10% for next 3 years and 6 percent thereafter forever. If your required rate of return is 8%, what price you should pay for the stock?
A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. Investors expe..
All the major world markets are considered efficient. In a well-diversified portfolio, company specific risks vanish and the total risk of the portfolio reduces to its market risk. Deviations from purchasing power parity can result in real foreign cu..
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