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Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end of the project. The project is expected to generate annual sales of $944,000 with related cash expenses of $620,001. The tax rate is 35% and the required rate of return is 14%. What is the initial cash outflow of this project?
Equipment costing $36,000 is purchased at the beginning of the year for cash. Depreciation on the equipment is $6,000 per year.
Why might the Fed want to focus its efforts on reducing long-term interest rates rather than shortterm interest rates during a weak economy?
DEF (British firm) is considering investing in a three year project that costs 150,000 pounds. DEF expects to receive 25,000 pounds and 50,000 dollars each year
Why is the budgeting process important to the success of a sport organization?
Assume that a futures contract on Treasury bonds with a face value of $100,000 is purchased at 92-20. If the same contract is later sold at 94-12.
Objective type questions on Capital Budgeting and stocks and explain Cause surpluses and shortages in markets respectively
Both have monthly payments and the property is expected to be held over the life of the loan. What is the incremental cost of borrowing the extra money?
If the bank holds $65 million in deposits and currently holds bank reserves such that excess rerves are zero, what required reserve ratio is implied?
Securitization has spread from mortgages to student loans and credit card debt. - However, few loans to businesses have been securitized. Explain why.
ABC, Inc. has a potential capital budgeting project with a growth option. The NPV of the project with the growth option is $1,631 and without the growth option is $472. What is the value of this option to ABC?
Assume that the risk-free rate is 3.8 percent. If a stock has a beta of 0.8 and a required rate of return of 11.5 percent, and the market is in equilibrium, what is the return on the market portfolio?
explain why an investment increases in value when the number of compounding periods increases? explain the difference
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