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Your firm is contemplating the purchase of a new $745,500 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $45,000 at the end of that time. You will be able to reduce working capital by $40,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. Assume the tax rate is 40 percent.
Suppose your required return on the project is 7 percent and your pretax cost savings are $195,000 per year. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV $
Suppose your required return on the project is 7 percent and your pretax cost savings are $135,000 per year. What is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $6.2 million, and the 2015 balance sheet showed long-term debt of $6.4 million. The 2015 income statement showed an interest expense of $215,000. What was the firm’s 20..
In 1983 the Japanese yen-U.S. dollar exchange rate was 240 yen per dollar, and the dollar cost of a compact Japanese-manufactured car was $8,250. Suppose that now the exchange rate is 108 yen per dollar.
Compensation for risk is an essential function of financial markets and, as such, disclosure of risk occurs routinely in required financial disclosures. Senior management officials must be able to assess risks that affect the firms they manage, and s..
Heath Foods's bonds have 12 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 9%. They pay interest annually and have a 9% coupon rate. What is their current yield? Round your answer to two decimal places.
Your firm is considering expanding its household products division. You iden- tify Procter & Gamble (PG) as a firm with comparable investments. Suppose PGs equity has a market capitalization of $144 billion and a beta of 0.57. PG also has $37 billion..
One-year T-bills currently earn 0.45 percent. You expect that one year from now, one-year T-bill rates will increase to 0.50 percent. If the unbiased expectations theory is correct, what should the current rate be on two-year Treasury securities?
Assume the standard deviation of security A is 0.3 and the standard deviation of security B is 0.33. The correlation coefficient between A and B is 0.4. What is the standard deviation of a portfolio composed of 55% security and 45% security B?
Volcker Company follows the residual theory of dividends. It has 8 million shares of common stock, and it maintains its optimal debt/assets ratio at 25%. Its EBIT next year is expected to be $25 million, with a standard deviation of $5 million. Find ..
Market prices can be efficiently priced if:
The article is talking about British laws as applied to workplace surveillance. Do you think that similar laws can work in the US to give more protection to employees? The article raises the question of consent from employees to be monitored. Do you ..
What interest rate would you quote if the owner asked you for a loan for $900,000 today? - What interest rate would you quote if the owner asked you for a loan for $1,000,000 today?
Discuss how successful airlines acknowledge different pricing strategies as they relate to the airline's overall business strategy. Provide an example(s). If possible exclude Southwest airlines in your discussion.
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