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We are evaluating a project that costs $908,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 87,200 units per year. Price per unit is $34.35, variable cost per unit is $20.60, and fixed costs are $752,000 per year. The tax rate is 40 percent, and we require a return of 13 percent on this project. 1. Calculate the base-case operating cash flow and NPV 2. What is the sensitivity of NPV to changes in the sales figure? 3. If there is a 500-unit decrease in projected sales, how much would the NPV drop? 4. What is the sensitivity of OCF to changes in the variable cost figure? 5. If there is $1 decrease in estimated variable costs, how much would the increase in OCF be?
What is the price of a bond with a coupon rate of 4.50%, a yield to maturity of 4.25%, a future value of $1000, semi-annual coupon payments, and 9 years until maturity?
You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.7, a debt-to-equity ratio of .6, and a tax rate of 30 percent. Assume her FCF is expected to grow at ..
For your second posting, describe a potential capital expenditure project from the industry in which you now work or an industry in which you are interested. What is the project? Describe and provide an approximate value of the initial cash flow. Des..
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The duck call industry includes four different companies with the following market share:
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The us dollar equivalent is 0.3841 for the Brazilian real and 1.8759 for the U.K. pound. this means that
ABC Corporation paid $2 per share dividend last year. The company is a supernormal growth and its earnings are expected to grow at a 25 percent rate for the next 3 years, 15% rate over the following 2 years and 5 percent thereafter. What are the pric..
Are there any arbitrage opportunities? If so, construct a trading strategy to take advantage of the opportunity.
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