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Galaxy Satellite Co. is attempting to select the best group of independent projects competing for the firm's fixed capital budget of $10,000,000. Any unused portion of this budget will earn less than its 20 percent cost of capital. A summary of key data about the proposed projects follows. Project PV of Inflows Initial Investment IRR A $3,050,000 $3,000,000 21% B $9,320,000 $9,000,000 25% C $1,060,000 $1,000,000 24% D $7,350,000 $7,000,000 23% 1.Use the NPV approach to select the best group of projects. (Note that just the PV of inflows is given, you must subtract the initial investment to find the NPV.) 2.Use the IRR approach to select the best group of projects. (Note that the discount rate or the cost of capital is 20%.) 3.Which projects should the firm implement based on your analysis of both techniques and given the capital rationing amount? Write an email to your boss, Andy Fast, the CFO, explaining your rationale proving the choices based on the considerations of shareholder value and the maximum investment budget. Keep in mind that you are less concerned with using the whole budget than with maximizing the total return to Galaxy satellite.
Which trade theory do you think best explain trade flows between the United States and China? Why? Do you think that China is pursuing an economic policy that can be characterized as neo-mercantilist?
Waller Co. (WAG) paid a $0.164 dividend per share in 2003, which grew to $0.420 in 2012. This growth is expected to continue. What is the value of this stock at the beginning of 2013 when the required return is 14.0 percent? (Round the growth rate, g..
ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity?
The cash flow in year 0 represents the initial equity investment. What problems would you encounter in computing the equity investor's rate of return on this investment?
should china be forced to alter the value of its currency?the united states and the european union members are
The company "Accusoft Systems" offers business owners a software package that maintains the records of many accounting functions from sales bills through bank transactions. The site license costs $ 22,000 per installation concept and involves a fee o..
1 which of the statements below is false?a if you invest money for a short period and buy a six-month cd you will not
A financial company that advertises on television will pay you $65,000 now for annual payments of $10,300 that you are expected to receive for a legal settlement over the next 8 years. Assume you estimate the time value of money at 9 percent. Use the..
Find the expected return and standard deviation of a portfolio that is invested 80% in Stock A and 20% in Stock B.
Keystone Corporation has just paid dividends of $2.50 per share, which the company projects will grow at a constant rate of 4% forever. If Keystone shareholders require 12% rate of return, what is the price of its common stock? Show you work
Winnebagel Corp. currently sells 28328 motor homes per year at $65824 each, and 11079 luxury motor coaches per year at $104355 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 21673 of these ca..
Consider the following data for a clinical laboratory: Using ABC techniques, determine the allocation rate for each activity. Now, using this allocation rate, estimate the total cost of performing each test. Verify that the total annual costs aggrega..
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