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A plant to make DVD player cost $40 million, and has an annual capacity of 100,000 units, and has an indefinite physical life. The variable production cost per unit is $20 and is not expected to change, if the cost of capital is 10% what is the price of a DVD player. Suggested solution: NPV = Costs + [(p- costs per unit) x annual capacity] = 0 cost of capital Now solve for "P" Problem 4 Company A is faced with the following capital budgeting decision. Its display freezer must be repaired. The cost f the repair will be $1000, and the system will be usable for another 5 years. Alternatively, the firm could purchase a new freezer for $5000 and sell the old one for $500. The new freezer has more display and will increase the profits attributable to frozen foods by 30 % Profits for that department were $5,000 in the last fiscal year. The company cost of capital is 9%. Ignoring taxes what should the firm do? Suggested solution guide
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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