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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $767 per set and have a variable cost of $386 per set. The company has spent $119797 for a marketing study that determined the company will sell 5349 sets per year for seven years. The marketing study also determined that the company will lose sales of 943 sets of its high-priced clubs. The high-priced clubs sell at $1164 and have variable costs of $654. The company will also increase sales of its cheap clubs by 1033 sets. The cheap clubs sell for $412 and have variable costs of $237 per set. The fixed costs each year will be $958079. The company has also spent $114193 on research and development for the new clubs. The plant and equipment required will cost $2822274 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $133232 that will be returned at the end of the project. The tax rate is 32 percent, and the cost of capital is 8 percent. What is the sensitivity of the NPV to changes in the price of the new clubs?
A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's e..
Kevin hams plans to borrow 8000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Kevin have to..
What is the current value of Vandells stock - How many shares must the firm sell to net $20 million after underwriting and flotation expenses?
Your portfolio actually earned 6.2 percent for the year. You were expecting to earn 8.6 percent based on the CAPM formula. What is Jensen's alpha if the portfolio standard deviation is 12.1 percent and the beta is .93?
Siracha Company has currently has $10,000,000 in equity and $0 in debt. Their earnings before interest and taxes (EBIT) of $1,000,000. Siracha Company is considering a 60% debt ratio, and at this level, could acquire capital at 9% interest. The appli..
Research Ford Motors Company and find capital projects this company has completed in the last 5 to 10 years.-What are the advantages and drawbacks to using each one?
Dr. Dan is considering investment in a project with beta coefficient of 1.75. What would you recommend him to do if this investment has an 11.5 percent rate of return, risk-free rate is 5.5 percent, and the rate of return on the market portfolio of a..
In what way is strategic planning often distinguished from operational planning? A firm that is living on its past laurels will probably have a culture that is
Tunney Industries can issue perpetual preferred stock at a price of $57.00 a share. The stock would pay a constant annual dividend of $5.00 a share. What is the company's cost of preferred stock, rp?
If the company maintains a constant 4.5% growth rate in dividends, what was the most recent different pair share paid on stock?
The Sharpe Co. just paid a dividend of $2.05 per share of stock. Its target payout ratio is 40 percent. The company expects to have earnings per share of $6.20 one year from now. If the adjustment rate is .3 as defend in the Lintner model, what is th..
Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 4% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 8% What will be your cash flow at the end of the year? What w..
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