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Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.512 million. The fixed asset falls into the 3-year MACRS class (MACRS Table). The project is estimated to generate $1,344,000 in annual sales, with costs of $537,600. The tax rate is 34 percent and the required return is 10 percent. The project requires an initial investment in net working capital of $168,000 and the fixed asset will have a market value of $117,600 at the end of the project. Required: (a) What is the net cash flow of the project for the following years? (Do not include the dollar signs ($). Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 1,234,567.89)) Net cash flow Year 0 $ Year 1 $ Year 2 $ Year 3 $ (b) What is the NPV of the project?
Supply Chains and Working Capital Management: - Examine the key reasons why a business may not want to hold too much or too little working capital. Provide examples that illustrate the consequences of either situation.
Explain how many times per year does Zocco turn over its inventory and consider that cost of goods sold is 75% of sales.
U.S. investors have $900,000 million to invest 1-year deposit rate offered by U.S. banks = 3.5% 1-year deposit rate offered on Australian $ = 3% 1-year forward rate of Australian $ = $0.64 Spot rate of Australian $ = $0.62
A company is planning to increase $43 million of external funding. Would there be financial leverage and what kind of financial leverage would be present if a corporation could issue bonds in the capital market,
Computation of profit of college at given number of student's strength - If the college can enroll 110 students the first year, how much profit will it make?
Assume you borrowed $12,000 at the rate of 9% and must repay it in four equal installments at the end of each of the next four years. By how much would you reduce the amount you owe in the first year?
Why do mergers and acquisitions often lead to consolidation of positions or reductions in workforce? What effect do these changes have on the employees?
Management is considering issuing $120,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities?
Suppose that Mary Brown Inc. hired you as a consultant to help it estimate the cost of capital. You have been provided with the following information:
Your portfolio has provided you with returns of 8.6 percent, 14.2 percent, -3.7 percent, and 12.0 percent over the past four years, respectively. What is the geometric average return for this period?
The tax rate is 33 percent and the required return for the project is 15 percent. What is the net present value for this project?
Stock valuation beneath equilibrium situation and Assuming the stock market is efficient and the stocks are in equilibrium
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