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1. Two pet rescue shelters in Charleston jointly own the ReTail Store which is staffed by volunteers and sells donated furniture to raise money for the two shelters. The first owner proposed the buy out the second owner to attain 100% ownership of the store. In deciding whether to sell, the second shelter had to determine the value of their 50% ownership of the store. There were conflicting views. As a small retail store, some thought the cap rate should be 20% which produced a relatively low value. On the other hand, the store had been in operation for 5 years and produced very stable profits; thus it should have a much lower cap rate and higher value. Further complicating matters was a provision in the by-laws that once a formal offer was made, that second shelter had to either accept the offer to sell or buy out the first shelter at that offer price. How would you approach this valuation?
2. The valuation of a mature publicly traded firm is easy - - just look up the stock price and multiply by the shares outstanding. For a start-up, there is no public price. You must calculate the present value of the anticipated net cash flows, discounted at the appropriate risk-adjusted discount rate. But that is when the difficulty sets in. What is the appropriate risk-adjusted discount rate?? Also, determining the anticipated cash flows is more difficult because there is only limited history to provide a guide.
By what amount is the cost basis of the rabbit hutches to be reduced for the year?
use assumed numbers for a hypothetical firm to demonstrate the difference between lifo and fifo costing method. comment
A firm is reviewing a project that has an initial cost of $71,000. The project will produce annual cash inflows, starting with year 1, of $8,000, $13,400, $18,600, $33,100, and finally in year 5, $37,900. What is the profitability index if the dis..
Assume Starbucks consumers 100 million pounds of coffee beans per year. As the price off coffee rises, Starbucks expects to pass along 60 percent of the cost to its customers through higher prices per cup of coffee.
Langston Labs has an overall WACC of 10 percent, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8 percent.
What is the annual equivalent value of a geometrically increasing series of payments which has first-year base of $30,000 increasing by 8% per year for 10 years with an interest rate of 12% compounded monthly?
a) Suppose an investment analyst takes a random sample of U.S equity mutual funds and calculates Sharp Ratio. The sample size is 100, and the average sharp ratio is 0.45. The sample has a standard deviation of 0.30. Calculate and interpret the 90 per..
Using the following parameters determine the yield to maturity on a bond.
a particular securitys default risk premium is 3 percent. for all securities the inflation risk premium is 2.90 percent
Compute the annual net cash flows assuming equipment and fixtures are depreciated using the 7-year asset class under MACRS.
Six-month U.S. securities have an annualized return of 6.5% and a periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar-Canadian dollar exchange rate in the 180-day forward market?
you want to buy a car and a local bank will lend you 25000. the loan would be fully amortized over 3 years 36 months
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