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Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project. Guthrie Enterprises needs someone to supply it with 154,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $1,940,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that in five years this equipment can be salvaged for $164,000. Your fixed production costs will be $279,000 per year, and your variable production costs should be $9.90 per carton. You also need an initial investment in net working capital of $144,000. If your tax rate is 39 percent and you require a 13 percent return on your investment, what bid price per carton should you submit?
An investor purchases 200 shares of XYX stock for $55.00 a share and immediately sells 2 covered call contracts at a strike price of $60.00 a share. The premium is $3.00 a share. What is the maximum profit and the maximum loss?
Suppose that she can obtain a 9% average return on her deposits and on her funds accumulated on her retirement plan.
Interest equivalent factor, Lori Stratton is considering investing in a bond that provides a yield of 8.35 percent or a preferred share with a yield of 7.09 percent. Lori lives in Ontario and at her level of taxable income, the federal tax rate is ..
Briefly discuss the impact of the changes in asset turnover and financial leverage on ROE over the the three years.
At what constant rate is the stock expected to grow after Year 3? Round your answer to two decimal places.
As an investor, what factors would you suggest before investing in the emerging stock market of developing country?
Explain how internal selection decisions differ from external selection decisions. Write down the differences among peer ratings, peer nominations, and peer rankings. Should they be used? and how this can be employed in an organization.
A strong dollar is very important; however, the taxation issued raised by the professor is potentially harmful. Why would a foreign investor invest money in the United State
Respond to the following statement: "Countries with large and efficient financial systems will generally achieve higher rates of economic growth than will countries with smaller,
Select two major currencies from the past year. What are similarities and differences between them? What have been drivers of each currency's performance?
Denard has two investment opportunities. He can invest in The Sunglasses Company or The Umbrella Company. What is the expected return and standard deviation of each company?
Determine the mean and standard deviation of the returns
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