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1. Consider a five-year project with the following information: initial fixed asset investment = $750,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $42/unit; variable costs = $21/unit; fixed costs = $390,000 per year; quantity sold = 100,000 units per year; tax rate = 34%. How sensitive is OCF to changes in quantity sold (i.e., the change in OCF given an increase of one unit sold in a year)?
$16.03
$15.28
$14.71
$13.86
$12.94
2. Michael M. has compiled this information related to a new project: Initial investment: $800,000; Fixed costs: $450,000; Variable costs: $12.00 per unit; Selling price: $37.00 per unit; Discount rate: 10 percent; Project life: 5 years; Tax rate: 34 percent. Fixed assets are depreciated using straight-line depreciation over the project's life. What is the financial break-even point?
26,875
27,102
27,493
27,863
29,140
You have just been hired to analyze the following projects for a start-up company. The firms’ weighted average cost of capital has never been estimated.
How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit?
The Agricultural Futures Exchange of Thailand was established in 2004 by the commerce ministry to help develop trading of futures contracts on rice, rubber and tapioca. The government aims the futures exchange to provide farmers and traders the hedgi..
Calculated before the charitable contribution deduction and before its dividends received deduction of $44,000.
Kirksville Inc. has 1,500 bonds outstanding that are selling for $932 each. What is Kirksville’s weighted average cost of capital?
You currently have a $325,000 30 year fully amortizing fixed rate mortgage with a 5.5% rate (Loan A).
Chamberlain Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 16,600 1 7,700 2 8,900 3 8,500 4 7,300 5 – 4,700 Required: The company uses an interest rate of 11 percent on all of its projects. Calculate the MIRR of the ..
Categorize each of the following transactions as taking place in either the primary or secondary market:
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $15 per share exactly 10 years..
What is the risk-free interest rate expressed as an effective annual yield?
A person aged 30 wishes to accumulate a fund for retirement by making deposits of $100 at the beginning of each month for 15 years followed by deposits of $200 at the beginning of each month for the next 15 years. Starting at age 65 withdrawals will ..
What will be the loan payoff at that time?
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