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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $820 per set and have a variable cost of $420 per set. The company has spent $152,000 for a marketing study that determined the company will sell 56,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,700 sets of its high-priced clubs. The high-priced clubs sell at $1,120 and have variable costs of $720. The company will also increase sales of its cheap clubs by 11,200 sets. The cheap clubs sell for $460 and have variable costs of $240 per set. The fixed costs each year will be $9,120,000. The company has also spent $1,130,000 on research and development for the new clubs. The plant and equipment required will cost $28,840,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1,320,000 that will be returned at the end of the project. The tax rate is 35 percent, and the cost of capital is 10 percent. Suppose you feel that the values are accurate to within only ±10 percent. What are the best-case and worst-case NPVs?
What is the likely impact of convergence on the insurance industry? Do you think there will be regulatory changes in the future? Why or why not?
Lakonishok Equipment has an investment in Europe. The project costs €9.5 million and is expected to produce cash flows of €2.7 million in year 1, €3.1 million in year 2, and €2.8 million in year 3. The current spot rate is $1.23/€. In addition, the s..
What is the profit per dollar from covered interest arbitrage?
Using center of-gravity model, compute the center of gravity for the population of the county. Show all of your computations, explain, and justify. Based soley on this criterion, where is the best stadium location? Research and explain at least three..
Calculating Float You have $35,400 on deposit with no outstanding checks or uncleared deposits. One day you write a check for $5,700 and then deposit a check for $7,300. What is your disbursement?
Walgreens just paid a $3.25 annual dividend. The company has a policy of increasing the dividend by 3.5% annually. You would like to purchase stock in this firm but realize that you will not have the funds to do so for another three years. If you req..
What would the new debt ratio be if the machine were leased? If it is purchased?c. Is the financial risk of the business different under the two acquisition alternatives?
Compare and contrast theoretical framework and conceptual framework. What are the objectives of a firm seeking to merge with another firm?
You have $16,000 you want to invest for the next 32 years. You are offered an investment plan that will pay you 8 percent per year for the next 16 years and 12 percent per year for the last 16 years. How much will you have at the end of the 32 years?..
You have two assets and must calculate their values today based on their different payment streams and appropriate required returns. Asset 1 has a required return of 14% and will produce a stream of $600 at the end of each year indefinitely. Asset 2 ..
What is the coupon rate if interest is paid semiannually?
A bank has decided it must raise external capital. Discuss the advantages and disadvantages of each of the following choices: a. Subordinated debt at 7.7 percent b. Preferred stock at a 10 percent dividend yield c. Common stock
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