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Your company has been approached to bid on a contract to sell 3,300 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 Due to technological improvements, beyond that time they will be outdated and no sales will be possible.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 $2.9 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 $86,000 to be returned at the end of the project, and the equipment can be sold for $266,000 at the end of production. Fixed costs are $631,000 per year, and variable costs are $146 per unit. In addition to the contract, you feel your company can sell 8,600, 9,500, 11,600, and 8,900 additional units to companies in other countries over the next four years, respectively, at a price of $265. This price is fixed. The tax rate is 30 percent, and the required return is 11 percent. Additionally, the president of the company will undertake the project only if it has an NPV of $100,000. What bid price should you set for the contract?
What is the fee the company must pay on the unused balance? What is the effective interest rate?
Ninja Co. issued 13-year bonds a year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 6.2 percent, what is the current bond price?
The company has the following independent investment projects available: Project Initial Outlay IRR 1 $100,0000 10% 2 $10,000 8.5% 3 $50,000 12.5%
DebtThe firm can sell for $980 a 10-year, $1,000-par-value bond paying annual interest at a 10% coupon rate. A flotation cost of 3% of the par value is required in addition to the discount of $20 per bond.
Recent financial information on Sunbeam Corporation Sunbeam has not performed great to date. However, it wishes to issue new shares to obtain $100,000 to finance expansion into a new market.
Cash Flows: A new project will generate sales of $74 million, costs of $42 million, and depreciation expense of $10 million in the coming year. The firm's tax rate is 35%. Calculate cash flow for the year by using all three methods listed below, a..
Explain the company and the product to illustrate the connection the company has with the environment and describe the impact this company's actions have on our environment
Bista Company announces and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?
Objective type questions on cost of capital and WACC and he company currently has no debt in its capital structure
Suppose a car company sold an issue of bonds with a 10-year maturity, a $1,000 par value-Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?
Write down the two methods for estimating debit cost of capital, and what do you do when there's default risk?
What is the role of the Federal Trade Commission (FTC) in healthcare administration? Describe any antitrust activities that the FTC has faced in the last five (5) years.
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