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Emperor’s Clothes Fashions can invest $4 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 5 million jars of makeup a year. Fixed costs are $3.4 million a year, and variable costs are $2.60 per jar. The product will be priced at $3.80 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 11%, and the tax rate is 30%.
a. What is project NPV under these base-case assumptions? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
b. What is NPV if variable costs turn out to be $2.70 per jar? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
c. What is NPV if fixed costs turn out to be $3.2 million per year? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
d. At what price per jar would project NPV equal zero? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)
Ten years ago a stock paid $1.50 in dividends. five years ago the stock will split 3 for 1. today the dividend is $0.60. what has been the dividend growth rate?
What is the Journal Entry? The office manager in San Diego ordered $350 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBI’s office.
what amount of additional funds will Wall-E need from external sources to fund the expected growth?
Oxford Corp. is considering refunding a $30,000,000, annual payment, 12% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $2 million of flotation costs on these bonds over their 30-year life. The new bonds would be issue..
Shortly after the Missouri Compromise, Congress imposed tariffs on foreign imports, which severely impacted the South.
The Nas Company purchased a loader for $52254. At the end of its 8-year useful life, What is the present worth of this machine?
Reagan Corp. has reported a net income of $836,200 for the year. The company's share price is $13.03, and the company has 307,810 shares outstanding. Compute the firm's price-earnings ratio.
In tight housing markets, rent controls are often applied to hold the price of housing to a reasonable level. How does this policy affect the relative gains of tenants and landlords, and the allocative function of prices?
Title of the article that you are to read:"Agency Problems in Public Firms: Evidence from Corporate Jets in Leveraged Buyouts" by Jesse Edgerton.Published in the Journal of Finance, December 2012.
how does the need for transparency in financial statements conflict with a company’s need to remain competitive?
What is the cost of equity using the dividend growth model? What is the market value of the firm? (round to whole number e.g., 24000 not 24000.56)
Whole life: For $1,150 per year (annuity) you can invest in the whole life policy and receive a 6% return on your money along with $100,000 of life insurance coverage. Term life: You can buy $100,000 of life insurance for $400 and invest the rest ($7..
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