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1. You are considering the purchase of an investment that would pay you $90 per year for Years 1-4, $82 per year for Years 5-7, and $27 per year for Years 8-10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then how much should you be willing to pay for this investment? Show your answer to the nearest $.01. Do not use the $ sign in your answer.
2. Virus Stopper Inc., a supplier of computer safeguard systems, uses a cost of capital of 9 percent to evaluate average-risk projects, and it adds or subtracts 1 percentage points to evaluate projects of more or less risk. Currently, two mutually exclusive projects are under consideration. Both have a cost of $ 391 and will last 4 years. Project A, a riskier-than-average project, will produce annual end of year cash flows of $ 101 . Project B, of less than average risk, will produce cash flows of $ 248 at the end of Years 3 and 4 only. To the nearest .01, list the NPV of the higher NPV project. Note, if the NPV is negative, place a - sign in front of your answer. Do not use the $ symbol.
write a report on evaluation of the models and concepts proposed outlining their limitations and merits.the report
Vedder, Inc., has 6.5 million shares of common stock outstanding. The current share price is $61.50, and the book value per share is $4.50. Vedder also has two bond issues outstanding. Assume that the overall cost of debt is the weighted average of t..
calculate Chacko? Inc.'s gross profit margin.
Fama’s Llamas has a WACC of 10.3 percent. The company’s cost of equity is 13.2 percent, and its pretax cost of debt is 8.9 percent. The tax rate is 40 percent. What is the company’s target debt–equity ratio?
A SPDR is an exchange traded fund (ETF) that is designed to generate the same return as the S&P 500 index. What is the portfolio weight on the T-Bills?
Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $10,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 10%; your aunt must inform the IRS and..
The market rate of return on this stock is 14.7 percent. What is the amount of the last dividend paid?
The retail price for a wrinkle-reducing injection is $550. Retailers buy directly from the manufacturer, who has a margin of 80 percent on their product. If the retailer margin is 40 percent, what is the manufacturer selling price to the retailer? w..
Discuss how to analyze capital budgeting decisions. Which measures are important? Why?
What is the amount of the firm’s total stockholder’s equity?
(Annuity payments) Mr. Bill S. Preston, Esq. purchased a new house for $90,000. He paid $30,000 upfront and agreed to pay the rest over the next 20 years in 20 equal annual payments that include principal payments plus 11 percent compound interest on..
What is the break-even price for selling guinea pigs as pets? What is the break-even price for selling guinea pigs as meat?
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