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Hoover Printing has a printing press that still has a useful life of 3 years, a book value of $35,000, could be currently sold for $28,000, and a salvage value of $21,000 at the end of it useful life. They are considering replacing it with a new press that will cost $100,000 that will last for 8 years with a salvage value of $4,000 at the end of the 8 years. Depreciation is not being considered in this analysis. By replacing the press they expect to increase annual earnings before taxes (through press efficiencies) by $20,000 a year increasing by 3% annually. Their net income is taxed at a 31% rate. Do a cash flow analysis, show the whole analysis, and recommend whether the new machine should be bought now or in 3 years when the old press must be replaced. Project WACC is 9.5%. Provide NPV, IRR, MIRR & Profitability Index of the project.
Management is considering issuing $120,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities?
What is the yaer 0 project cash flow?c. What are the project's annual cash flows during years 1, 2, ,and 3? Should the maching be purchased? Explain your answer.
If the firms sales average $2 million a month, what is the average investment in acounts receivable? What is the annual cost to the firm of offering the trade discount?
Commercial paper is usually sold at a discount. Company A has just sold an issue of ninety day commercial paper with a face value of 1 million dollar.
Suppose that you obtain a quote for a one year forward rate on the Mexican peso. Suppose that Mexico's one-year interest rate is 40%, while the United State
A stock has an expected return of 14 percent, its beta is 1.20, and the risk-free rate is 5.8 percent. What must the expected return on the market be?
The dividend per share in one year is $2. In year two it is $4 a share. Then the dividend will grow at 5 percent per year after that. The expected rate of return is 12 percent.
Computation of expected return using CAPM approach and Required rate of return-Assume that the risk-free rate is 6 percent
If the house is currently worth $245,000 and most lenders are willing to lend up to 90% of home value, how much excess equity can the Peters cash out? (Ignore the tax effects).
Question about sets and set theory: Why is it important to be able to identify sets and theory as related to business?
Computation of expected rate of return using CAPM approach and what is the default risk premium on the corporate bond
This part of the project is to analyze the following capital structure plans. You will use the EBIT-EPS analysis to evaluate the two plans. One plan is all equity and one has debt and equity.
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