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An independent film maker is considering producing a new movie. The initial cost for making this movie will be $20 million today. Once the movie is completed, in one year, the movie will be sold to a major studio for $25 million. Rather than paying for the $20 million investment entirely using its own cash, the film maker is considering raising additional funds by issuing a security that will pay investors $11 million in one year. Suppose the risk-free rate of interest is 10%.
Refer to the information above. Assuming that the film maker issues the new security, the net present value (NPV) for this project is closest to what amount? Should the film maker make the investment?
(a)$1.7 million; Yes(b)$1.7 million; No(c)$2.7 million; Yes(d)$2.7 million; No
Please give a written summarization on article "Time is Money" by Emily Oster. What is the take away of article?
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Currency futures contracts are traded on organized exchanges. Assume you sell a contract on Australian US dollars in the amount of A$100,000 on Chicago Mercantile Exchange at $0.7900/A$.
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Chip's Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, determine the effect of the price increase on the firm's FCF for the year
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Your firm needs to increase $10 million. Suppose that flotation costs are expected to be $15 per share and that the market price of the stock is $120,
The Green Balloon issued 20-year zero coupon bonds 4 years ago. Currently, these bonds are selling at 32.8 percent of face value of $1,000. The tax rate is 35 percent.
Show all necessary calculations required to evaluate Forrestor's proposed relaxtion of credit standards. What is the additional profit contribution from an increase in sales?
It negotiates a 1-month forward contract at the beginning of every month to hedge its payables. Assume the British pound appreciates consistently over the next 5 years. Will Sanibel be affected? Explain.
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