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Consider a project to supply 104 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 $1,940,000 five years ago; if the land were sold today, it would net you $2,140,000 aftertax. The land can be sold for $2,340,000 after taxes in five years. You will need to install $5.44 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 $540,000 at the end of the project. You will also need $640,000 in initial net working capital for the project, and an additional investment of $54,000 in every year thereafter. Your production costs are 0.54 cents per stamp, and you have fixed costs of $1,090,000 per year. If your tax rate is 35 percent and your required return on this project is 11 percent, what bid price should you submit on the contract?
Write a DETAILED analysis and comparison of the income statement items and differences between the two. Be sure to explain why the common-size statement is helpful in this analysis.
The company just paid a $1.80 dividend and plans to pay $1.86 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return (%) on this stock?
ques 1.i what are the factors affecting the capital structure of the company?ii the company raised preference share
You are considering purchasing a 15-year 8% unsecured bond at a price of $960: How much is the bonds face value? How much is the bonds coupon? What is the bonds current yield?
The current price of Yusof Corporation stock is RM26.50 per share. Earnings next year should be RM2 per share and it should pay a RM1 dividend. The P/E multiple is 15 times on average. What price would you expect for Yusof Corporation’s stock in the ..
Consider the following two mutually exclusive projects, X and Y, and their cash flows information, Project Year 0 Year 1 Year 2 Year 3 Year 4 X ($1,400) $350 $750 $650 $650 Y ($1,000) $300 $400 $500 $600 (a) Assume that the discount rate is 12%, comp..
A trader creates a bear spread by selling a 6-month put option with a $25 strike price for $2.15 and buying a 6-month put option with a $29 strike price for $4.75. What is the initial investment? What is the total payoff (excluding the initial invest..
The real risk-free rate is 3%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 8.4%. What is the maturity risk premium for the 2-year security?
Kelly Inc's 5-year bonds yield 7.50% and 5-year T-bonds yield 4.50%. The real risk-free rate is r* = 2.5%, the default risk premium for Kelly's bonds is DRP = 0.40%, the liquidity premium on Kelly's bonds is LP = 2.6% versus zero on T-bonds, and the ..
understanding supply chain and how the consumer can play a critical role in the supply chain is an important part of
A bond has a $1,000 par value, 7 years to maturity, and a 9% annual coupon and sells for $1,095. What is its yield to maturity (YTM)? Assume that the yield to maturity remains constant for the next 4 years. What will the price be 4 years from today?
What is the yield to maturity of a five-year, $5000 bond with a 4.5% coupon rate and semi annual coupons if this bond is currently trading for a price of $4876?
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