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Your company has been approached to bid on a contract to sell 4,100 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. The equipment necessary for the production will cost $3.7 million and will be depreciated on a straight-line basis to a zero salvage value. Production will require an investment in net working capital of $94,000 to be returned at the end of the project and the equipment can be sold for $274,000 at the end of production. Fixed costs are $639,000 per year, and variable costs are $154 per unit. In addition to the contract, you feel your company can sell 9,400, 10,300, 12,400, and 9,700 additional units to companies in other countries over the next four years, respectively, at a price of $305. This price is fixed. The tax rate is 35 percent, and the required return is 9 percent. Additionally, the president of the company will only undertake the project if it has an NPV of $100,000. What bid price should you set for the contract?
Abagail Nelson a 25-year old personal loan officer at First National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $3,000 per year for her retirement fund and assumes that she'll retire a..
Project the effective gross income (EGI) for the next five years.- Project the expense reimbursements for the next five years.- Project the net operating income (NOI) for the next five years.
Suppose in 2015, the Republican leadership in the House proposes that ALL bond interest income be exempt from federal income taxes, NOT just municipal bond interest. Explain why governors (the majority of which are Republican) might be opposed to suc..
The Atlantic Coast Shipping Company has a warehouse terminal in Spartanburg, South Carolina. The capactiy of each terminal dock is three trucks. As trucks enter the terminal, the drivers receive numbers; and when one of the tree dock spaces becomes ..
Suppose Stark Ltd. just issued a dividend of $2.14 per share on its common stock. The company paid dividends of $1.80, $1.89, $1.96, and $2.07 per share in the last four years. If the stock currently sells for $60, what is your best estimate of the c..
How should the remaining investments be distributed and what is the associated risk?
Bevel Building Products, Inc., whose common stock is currently selling for 12$ per share, is expected to pay a 1.80$ dividend, and sell for 14.40 one year from now. What are the dividend yield, growth rate, and total rate of return, respectively?
For the case shown in the following? table, determine the amount of the? equal, annual,? end-of-year deposits necessary to accumulate the given sum at the end of the specified? period, assuming the stated annual interest rate. The amount of the? end-..
XYZ sold a call option on Canadian dollars for $.01 per unit. The strike price was $.76, and the spot rate at the time the option was exercised was $.82. Assume XYZ did not obtain Canadian dollars until the option was exercised. Also assume that ther..
Calculating the WACC for a firm requires a number of inputs, many of which are estimates. How would errors in these estimates impact the WACC?
You must evaluate a proposal to buy a new milling machine. The base price is $108,000 and the shipping and installation costs would ass another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. Wh..
Expectations Theory One-year Treasury securities yield 4.55%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6.6%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities?..
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