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A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast growing craft beer industry. Your projected sales in the first year is 7500 kegs. Your projected growth rate is 8 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $30 per keg and keg sales are priced at $55 each. The equipment to begin production is $175,000. The equipment will be depreciated using straight line depreciation over a five year life and has no salvage value. The tax rate is 34 percent and the required return is 25 percent. What is the NPV of the project and should you pursue the project?
$42,313.13 Yes, take the project.
$67,065.11 Yes, take the project.
$10,310.70 Yes, take the project.
XYZ Corporation has $312,900 in total assets, and its uses only common equity capital (i.e., zero debt). Its sales last year were $620,000, and its net income after tax was $24,655. Stockholders recently voted in a new management team that has promis..
Olin Transmissions, Inc., has the following estimates for its new gear assembly project: price 5 $ 1,400 per unit; variable costs 5 $ 220 per unit; fixed costs 5 $ 3.9 million; quantity 5 85,000 units. What values should the company use for the four ..
Enrite Gas recently paid a $4.75 annual dividend on its common stock, which is expected to increase at an average rate of 3.5% per year. If the stock is currently trading for $39.33 per share, what is its market rate of return?. Town Bagel common sto..
What is the required rate of return on a preferred stock with a $50 par value, a stated dividend of 7% of par, and a current market price of (a) $55, (b) $80, (c) $109, and (d) $149 (assume the market is in equilibrium with the required return equal ..
Last year a company issued 12-year 10% semiannual coupon bond at its par value of $1000. What is the bond’s yield to maturity today if the bond sells for $1050 now?
The tax rate is 40 percent. What discount rate should API apply to the cash flows from "new" projects in the Financial Services Division?
Last year Blease Inc had a total assets turnover of 1.33 and an equity multiplier of 1.75. Its sales were $295,000 and its net income was $10,600. The CFO believes that the company could have operated more efficiently, lowered its costs, and increase..
Based on the information below, calculate the weighted average cost of capital. Great Corporation has the following capital situation.Debt: One thousand bonds were issued five years ago at a coupon rate of 11%
last conklin inc had a total assets turner of 1,33 and equity multiplier of 1.75 its sales were 295,000 and its net income was 10,600. the cfo believes the company could have operated more effiently, lowered its cost, and increase its net income by 1..
Assume interest rate parity holds, and the current six-month risk-free rate in the United States is 1.43 percent. The six-month risk-free rate in Great Britain, Japan, and Switzerland must be ___percent, ___percent, and ___percent, respectively.
What can I say to illustrate the intrinsic value of human capital? Why would you think that conflict may occur because of these style differences? What are the pros and cons associated with these styles?
FitBit, a big player in personal fitness gear, is evaluating a new technology to provide not only heartrate and blood pressure feedback but extensive feedback on every bite of food eaten and lifestyle choices made. The project is expected to provide ..
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