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Aubie Space Industries has purchased a new robot for their rocket assembly plant in Montgomery. The installed first cost of the robot is $250K and the robot is depreciated via MACRS on a 7 year life. Hyundai pays $50K for the robot from retained earnings and takes out an amortized loan of $200K which is payable in 3 equal installments (payments) over 3 years (each installment paid at the end of the year). The nominal interest rate (APR) of the loan is 8%. The robot is estimated to cost $4,000 the first year in maintenance, and this will increase by $1000 each year. The cost savings (benefits) the robot is estimated to be $50K the first year and $60K thereafter. The robot will be dismantled and sold after 3 years. The estimated salvage value at that time is $140K. Hyundai has a tax rate of 35% and an after tax MARR of 10%. Find the after tax cash flows for each of these 3 years and overall net present value of the proposed project.
Jen caused a 3 car accident near her home in akron, ohio. She has the ohio Minimum liability coverage with no collision or comprehensive coverage. Jason, the drive of one of the other cars, suffered injuries leading to 42,000 in medical bills. How mu..
Two bonds have 10 years to maturity. Bond A has a coupon rate of 2.45% and a price of 99.805 (% of FV). Bond B has a coupon rate of 5.90% and a price of 105.214 (% of FV). The bonds make semi-annual coupon payments. Which bond is selling at a premium..
FINC 430 Financial Management - Acquisition Proposal Research Project Describe what you believe to be the primary issues/needs of the parties involved (i.e., target firm stakeholders) and -Recommend a deal structure that addresses the primary needs ..
Assume that the risk-free rate is 3.5% and the market risk premium is 5%. What is the required return for the overall stock market? What is the required rate of return on a stock with a beta of 2?
If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. There are two approaches to use to account for flotation costs. The first approach is to add the sum of flotation costs for the debt, preferred, and..
What is the Book Value Per Share based on the information above? If the market price per share $50 for XYZ Company, what is the total value of XYZ Company?
Assume that debt is riskless throughout this problem. If Hula is an equity financed firm, the weighted average cost of capital for the project is.
Suppose you have $50,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $20 per share. You notice that a put option with a $20 strike is available with a premium of $2.5. Calculate your percentage..
Trust Bankers just paid an annual dividend of $1.9 per share. The expected dividend growth rate is 6.1 percent, the discount rate is 12 percent, and the dividends will last for 18 more years. What is the value of the stock? A share of stock just paid..
(Cost of preferred stock) The preferred stock of Walter Industries Inc. currently sells for $35.67 a share and pays $2.49 in dividends annually. What is the firm's cost of capital for the preferred stock?
(Describing a firm’s capital structure) Lowe’s Companies, Inc. (LOW) and its subsidiaries operate as a home improvement retailer in the United States and Canada. As of February 1, 2008, it operated 1,534 stores in 50 states and Canada. The company’s ..
If the forward rate is $0.6735/TL, how could the bank arbitrage using a sum of $6 million? What is the spread earned?
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