Your company will generate $66,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.50 percent, what is the present value of the savings? (Do not round intermediate calculatio..
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Big steve's makers of swizzle tickets is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $110,000 nd will generate net cash inflows of $16,000 per year for 8 years. What is the projected NPV u..
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Calvin is an 85 year old single taxpayer who is in the 39.6% federal income tax bracket. As part of his estate planning strategy, he gifted General Electric Corporation bonds to his 30 year old grandson, Casey, who is single and in the 25% federal in..
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Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. Wh..
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The December 31, 2015, balance sheet of Schism, Inc., showed long-term debt of $1,375,000, $135,000 in the common stock account, and $2,600,000 in the additional paid-in surplus account. What was the firm's 2016 operating cash flow, or OCF?
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Expected interest rate Lloyd Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years, are callable 6 years from today at $1,025. They sell at a price of $1,278.56, and the yield curve is flat. What is the b..
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A stock has a beta of 2.2, the risk-free rate is 6 percent, and the expected return on the market is 12 percent. Using the CAPM, what would you expect the required rate of return on this stock to be? What is the market risk premium?
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We want to retire in 40 years, and we shall need $45,000 income per annum during our retirements which will last 35 years. We can save $20,000 annually during the first 9 years. We would like to know what the pension fund should be to finance our ret..
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Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds have 20 years to maturity, make semiannual payments, and have a YTM of 9 percent. If interest rates suddenly rise by 2 percent, what is the percentage price ..
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The MoMi Corporation’s income before interest, depreciation and taxes, was $3.2 million in the year just ended, and it expects that this will grow by 5% per year forever. Use the free cash flow approach to calculate the value of the firm and the firm..
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At the beginning of 2014, ABC Corp. issued (sold) $80 million in 10-year callable bonds at par value $1,000 paying a 9.0% annual coupon rate that is paid semiannually. The bonds are callable after 5 years for a call premium equal to one annual coupon..
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On January 1, 2015, Valuation Allowance for Trading Investment has a zero balance. On December 31, 2015, the cost of trading securities portfolio was $64,200, and the fair value was $67,000. Prepare the December 31, 2015, adjusting journal entry to r..
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