Reference no: EM132293126
1. You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. The project has a 3-year life. You estimate the revenue for the next three years are as follows: $400,000 in year 1, $500,000 in year 2, and $530,000 in year 3. The cash expenses are expected to be $325,000 in year 1, $381,250 in year 2, and $398,125 in year 3. The project requires an initial investment of $165,000, which is depreciated straight-line to zero over the 3 year project life. The actual market value of the initial investment at the end of year 3 is $35,000. Initial net working capital investment is $75,000 (at year 0) and NWC will maintain a level equal to 20% of sales each year thereafter. The tax rate is 34% and the required return on the project is 10%. What is EBIT for the project in the first year?
Given the $75,000 initial investment in NWC, what change occurs for NWC during year 1?
a. There is no change in NWC.
b. There is a $5,000 increase in NWC.
c. There is a $5,000 decrease in NWC.
d. There is an $80,000 increase in NWC.
e. There is an $80,000 decrease in NWC.
2. What is the NPV of the following set of cash flows if the required return is 15%?
Year Cash Flow
0 -$10,000
1 -$ 1,000
2 $10,000
3 $10,000
4 -$ 5,000
a. $408.27
b. $4000.00
c. $6,125.00
d. NPV cannot be found because the sign of cash flows changes more than once
e. None of the above
|
Can financing decisions create value
: Describe what it means to have strong, semistrong and weak efficiency in providing financial information to investors.
|
|
Calculate mean-mode and standard deviation of two options
: Calculate the mean, mode, and standard deviation of the two options. Offer an analysis of the two options. Which do you recommend and why?
|
|
Find wacc and use as the discount rate
: Find WACC and use as the discount rate to find the NPV. You have the following information regarding the firms' sources of financing:
|
|
Analyze the buyers-suppliers-substitutes and rivals
: Identify and analyze the buyers, suppliers, substitutes, rivals, and potential entrants for the carbonated soft drink industry.
|
|
What change occurs for nwc during year 1
: Given the $75,000 initial investment in NWC, what change occurs for NWC during year 1?
|
|
How you would deploy such a strategy
: In order to accomplish this task, you need to perform an analysis using quantitative and qualitative measures to determine the proper course of action.
|
|
Treasury securities two years
: Assume that the expectations theory holds. What does the market expect will be the yield on 1-year Treasury securities two years from now?
|
|
Entice these professionals to consider organizing union
: What is the message that you would suggest using to entice these professionals to consider organizing a union.
|
|
What is the company coefficient of variation
: The CFO of Brady Boots has estimated the returns to Brady's stock, depending on the state of the economy. He has also compiled analysts' expectations
|