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M Inc asks you to perform a feasibility study of a new video game that requires an initial investment of $8 million.M Inc. expects a total annual operating cash flow of $1.5 million for the next 10 years. The relevant discount rate is 10 percent. Cash flow occur at year-end. After one year, the estimate of remaining annul cash flows will be revised wither upward to 2.75 million or downward to $345,000. Each revision has an equal probability of occurring. At that time, the video game project van be sold for $3.1 million. What is the revised NPV given that the firm can abandon the project after one year? Please show the work.
A. $1,986,863.22
B. $1,971,507.04
C. $1,216,850.66
D. None of the above
Tillyard Inc. requires a $25,000 1-year loan. The bank offers to make the loan, and it offers three choices: (1) 15 percent simple interest, 9 percent add-on interest, 12 end-of-month payments. The first two loans would require a single payment at th..
Hinkle Inc. expects the first three years of a proposed project would have cash flows of $320,000 a year. If Hinkle uses a discount rate of 13%, about what is the present value of the expected yearly cash flows?
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Brief summary of the video clip (no more than two paragraphs) Does the video clip discuss public transportation in negative, positive or neutral terms? Who are the stakeholders in the video clip (what groups/persons/communities are discussed)?
NPV: Project K costs $70,000, its expected cash inflows are $13,000 per year for 12 years, and its WACC is 9%. What is the project's NPV?
You are evaluating two different silicon wafer milling machines. The Techron I costs $228,000, has a three-year life, and has pre-tax operating costs of $59,000 per year. The Techron II costs $400,000, has a five-year life, and has pre-tax operating ..
A particular firm is owned by members of a single family. Most of the wealth of this family is derived from the operations of this firm, and the family does not want to "go public" with the firm by selling its equity position to outside investors. Wi..
A company believes it can sell 5,600,000 of its proposed new optical mouse at a price of $10.00 each. There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the targ..
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