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Your company, Home Maintenance, Inc., has decided to expand into lawn care. The expansion will involve the purchase of a truck, trailer, mowers, edgers and other miscellaneous equipment costing approximately $70,000. This equipment will have no salvage value at the end of three years. They will be depreciated on a straight-line basis over 3 years. The average price per lawn is $50, and you expect to be able to do 300 lawns per week, for 20 weeks of the year. You expect to do the same number of lawns each year. You will have three employees whom you will have to pay $9 each, or $27 total, per lawn. The cost of gas and oil is approximately $4 per lawn. You will spend some of your own additional time managing the business, and value this time at $16,000 per year. You estimate that you will need approximately $2,500 in working capital immediately, which you will get back at the end of the project. You paid $3,000 last year for a business plan and permit for the lawn service. Your company is financed entirely with equity. Assume the appropriate cost of capital for the project is 15%.
Prepare pro-forma income statements for the three years.
Determine whether you should you open this business.
How would you justify a capital purchase to your vice president as to why the purchase would be a good investment for the hospital. What are the operating costs you took into consideration, what facility considerations are involved regarding this new..
A speculator buys a call option for $3, with an exercise price of $50. The stock is currently priced at $49, and rises to $55 on the expiration date. The speculator will exercise the option on the expiration date (if it is feasible to do so). What is..
The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's taxable income, or earnings before..
make one lump sum investment today for your retirement, how much would that lump sum need to? be?You will need to make one lump sum investment today.
What is the 2001 cash conversion efficiency? How long is the 2000 cash conversion period? What is the 2001 sustainable growth rate? Holding costs are estimated at $1.25per ton of bauxite. What is the EOQ for Torque?
Professional analysis of the company's Financial statement and P/L and cash flow statement. No paper writing is needed. Just some graphs and proper analysis of the company as a finance professional. some details are included in the paper
A buyer thinks he can come up with a down payment of $1,300 per acre and he hopes to finance the rest at a lower interest rate. Approximately how low must the interest rate be for the net profit of $150 per acre to meet the loan payments on a loan of..
A colleague has evaluated projects using the firm's average discount rate, which is the discount rate on the average risk project of the firm. He produced the following report:
Assume that the CAPM holds. Assume also that the expected return on the market portfolio is 10%. If a stock with a beta of 2 has an expected return of 15% in this economy, what is the expected return on a stock with a beta of 0.5?
Miller, Inc., has declared a $6.30 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 10 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Miller sells for $114 per share, a..
An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.2 million. Find the crossover rate. Is i..
Suppose the inflation coefficient aπ is positive but the output coefficient ay is zero. Does the economy still return to equilibrium with 0 and π - πT after a shock? Explain.
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