RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,000 1 10,200 2 12,900 3 14,800 4 11,900 5 – 8,400 The company uses a discount rate of 13 percent and a reinvestment rate of 6 percent on all of its projects.
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The Underground's has annual sales of $1.46 million. The cost of goods sold is equal to 80 percent of sales. The firm has an average accounts receivable balance of $150,000 and an average accounts payable balance of $163,500. How many days on average..
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You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $20,900. Use of the truck wil..
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FreddieMac reports that the average rate on a 30-year fixed rate mortgage is 3.92% as of January 2012. This is down from 4.76% in January 2011 and 5.03% in January 2010. If you have a $226,000, 5%, 30-year mortgage, how much interest will you save if..
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Barnes Enterprises has bonds on the market making annual payments, with 15 years to maturity, a par value of $1,000, and a price of $954. At this price, the bonds yield 9.3 percent. What must the coupon rate be on the bonds?
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Which of the following are negative covenants that might be found in an indenture?
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Explain what is meant by bootstrapping when raising seed financing and why bootstrapping is important. Describe the role of venture capitalists in the economy and discuss how they reduce their risk when investing in start-up businesses.
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A firm issues $170 million in straight bonds at par and a coupon rate of 8.5%. The firm pays fees of 2% on the face value of the bonds. A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called ..
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A project has an initial cost of $43,350, expected net cash inflows of $12,000 per year for 6 years, and a cost of capital of 14%. What is the project's PI?
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You have an investment oppurtunity that requires an initial investment of $2,600 today and will pay $5,000 in one year. What is the Rate of return of the oppurtunity?
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RAK, Inc., has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are projected to be $28,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percen..
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Maxwell Software, Inc., has the following mutually exclusive projects. Year Project A Project B 0 –$33,000 –$36,000 1 18,500 19,500 2 15,000 13,500 3 4,200 15,000. Calculate the payback period for each project. Which, if either, of these projects sho..
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