Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Robert Smith of Medical Research Corporation (MRC) was thrilled with the response he had received from drug companies for his latest discovery, a unique electronic simulator that reduces the pain from arthritis. The process had yet to pass rigorous Federal Drug Administration (FDA) testing and was still in the early stages of development, but the interest was intense. He received the three offers described in the following paragraph.
Offer 1:
$1,200,000 now plus $200,000 from years 6 through 15. Also, if the product did over $100 million in cumulative sales by the end of year 15, he would receive an additional $2,100,000. Dr. Smith thought there was a 100 percent probability this would happen. He is planning to use an 8 percent discount rate to evaluate offer 1.
Offer 2:
Thirty percent on the buyer’s gross profit on the product for the next four years. The buyer in this case was Zbay Pharmaceutical. Zbys’s gross profit margin was 60 percent. Sales in year one was projected to be $2 million and then expected to grow by 40 percent per year. He is planning to use an 8 percent discount rate to evaluate offer 2.
Which offer should Dr. Smith accept? Please explain. Hint: Find the present value of each of the two offers and indicate which one has the highest present value. (please explain findings through work shown)
Another utilization of cash flow analysis is setting the bid price on a project.
A company has identified the following investments as looking promising. Each requires an initial investment of $1.2 million. Which is the best investment?
The CEO of Buffalo Bob’s Chicken Wings is considering selling her firm, and wants to know what it is worth. What is the value of the firm under scenario 1.
What are the strategies to be adopted by the construction company and by the Copper producer, if they want to cover themselves with a future?
Diamond Electronics, Inc is a leading producer of batteries, which are used in a wide variety of products and known for its power and durability.
Assume the net present value method is used to evaluate investment opportunities. A manager is faced with several investments, but only has funding for one investment. Which investment should be chosen? When using the net present value method, if the..
You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .3, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent a..
you decide to get a better understanding of the cash flows and other financial basics about the business.
The company's marginal tax rate is 30%. What is the project's cash flow in year 1 (t = 1)?
If a company has 100,000 shares of its “$5 Cumulative Preferred Stock” Outstanding, How much of the dividends in year three would go to the COMMON shareholders?
ABC Inc. bonds have a $1,000 face value. The promised annual coupon is $71. What is the price of these bonds?
They? don't have slightest idea what return they would be making on investment of $8,434.22. The annual rate of return your folks would be earning on investment
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd