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Consider a project to supply 105 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,950,000 five years ago; if the land were sold today, it would net you $2,150,000 aftertax. The land can be sold for $2,350,000 after taxes in five years. You will need to install $5.45 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project’s five-year life. The equipment can be sold for $550,000 at the end of the project. You will also need $650,000 in initial net working capital for the project, and an additional investment of $55,000 in every year thereafter. Your production costs are .55 cents per stamp, and you have fixed costs of $1,090,000 per year. If your tax rate is 30 percent and your required return on this project is 10 percent, what bid price should you submit on the contract? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)
Bid price =
According to the efficient markets hypothesis, professional investors will earn: excess profits over the long-term. a dollar return equal to the value paid for an investment. excess profits, but only on short-term investments. a return that "beats th..
You are developing a proposal to open three new mexican restaurants around the metro detroit area over the next four years. The Project requires a purchase of $800,000 of equipment with a four year useful life and a book value of zero at the end of t..
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Hot Tissue Corp., a young, biotechnology firm, is considering an initial public offering of common stock. The company has no debt, and it expects total revenue next year of $40 million. Revenues are expected to grow at an annual rate of 4% indefinite..
Analyze finance and value creation arguments. - Analyze finance and value creation facts and data.- Analyze validity of finance and value creation arguments.
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