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What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $332,000 must be spent on new equipment. The equipment has an expected life of 6 years and will be depreciated straight-line over that same period to a book value of 0. New annual sales of $201,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 46% of sales. Tax rate is 31%. In the event EBIT is negative, the firm would have a tax credit based on the 31% tax rate. Fixed cash operating expenses are $50,000 per year. Interest expense is expected to be $22,000 each year. Salvage value of the equipment at the end of its life is expected to $66,000. (Round your answer to the nearest penny and enter with a decimal point (a period).)
Suppose we observe the three-year Treasury security rate (1R3) to be 5.3 percent, the expected one-year rate next year—E(2r1)—to be 5.8 percent, and the expected one-year rate the following year—E(3r1)—to be 6.2 percent. If the unbiased expectations ..
Dartsch Corporation just paid a dividend of €1.45. Dartsch is expected to increase its dividend by 12 percent for the next five years, thereafter the firm’s dividends are expected to grow at a more modest rate of 4 percent indefinitely. If the requir..
Calculate a table of interest rates based on the following information: The pure interest rate is 1.6% Inflation expectations for year 1 = 3%, year 2 =3.5%, years 3-5 =5% The default risk is .1% for year one and increases by .2% over each year Liquid..
Victor owes $6500 to Virginia. The loan is payable in one year at 6% interest. Virginia needs cash to pay medical bills,so four months before the loan is due,she sells the note (loan) to the bank. If the bank wants a return of 9% on its investment,ho..
This problem is about pricing through a channel of distribution. The product is shoes. The total landed cost to the importer is $20 for a pair of shoes (to their warehouse from any manufacturer around the globe).
ABC international is considering purchasing for $50 000 a machine which will produce 100 000 units of a product per annum for three years. These products will be sold for $20 each and unit variable costs are expected to be $15. Incremental fixed cost..
Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.2 million. The firm also has a profit margin of 30 percent, a retention ratio of 20 percent, and expects sales of $8.2 million next..
What is the future value of $1,200 a year at the end of each year for 40 years at 8 percent interest? Assume annual compounding.
The Cookie Shoppe expects sales of $2,900 next year. The profit margin is 4 percent and the firm has a 41 percent dividend payout ratio. What is the projected increase in retained earnings?
Given the following information: interest rate 8% tax rate 30% dividend $1 price of the common stock $50 growth rate of dividends 7% debt ratio 40% a. Determine the firm's cost of capital. b. If the debt ratio rises to 50 percent and the cost of fund..
Janice plans to save 75$ per month, starting today, for 20 years. Kate plans to save 80$ a month for 20 years, starting one month from today. Both Hanice and kate expect to earn an average return of 5.5 percent on their savings. At the end of the 20 ..
A homeowner took out a 20-year, fixed-rate mortgage of $410,000. The mortgage was taken out 10 years ago at a rate of 5.60 percent. If the homeowner refinances, the charges will be $4,000. What is the highest interest rate at which it would be benefi..
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