Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
ABC, Inc is considering launching a new product which incurred $2.5 million in Research and Development expenses over the last year. The company will spend $1.8 million to acquire the equipment necessary for the manufacture of the new product. The equipment will last for 15 years and have a salvage value of $35,000. It will be depreciated to zero over 10 years using straight line depreciation. The company will also have an increase of $250,000 in accounts receivable and a decrease of $75,000 in accounts payable. The company anticipates to produce 100,000 units every year for the next 15 years and sell the units for $4 per unit. The variable costs are $0.25 per unit and the annual fixed costs are projected to be $10,000 per year. The company has a target capital structure of 40% debt and 60% equity. The company's outstanding bonds have a yield to maturity of 5.5% and the company's tax rate is 30%. The company has a beta of 1.4, the risk free rate is 2% and the market risk premium is 6%.
Answer the questions below and show all the formulae you used and all the calculations. Each question is worth 10 points and the entire assignment is worth 100 points
1) What is the project's cash flow at time 0?
2) What is the after tax operating cash flow in years 1 through 10?
3) What is the after tax operating cash flow in years 11 through 14?
4) What is the after tax cash flow in year 15?
5) What is the company's cost of equity?
The dividend is expected to grow at 7.56% each year. If the stock is currently selling for $277.01, what is the required rate of return on the stock?
a self-employed worker operates a firewood-splitting service. he purchased a commercial-grade wood splitter for 5800.
The Chief Engineer ordered the Production Department"s Project Leader, Alison Passette, to create a project immediately to find out precisely what was causing the failures and to find a way to solve the problem.
financial news claims to be unbiased and fact based. this is offset at least partially by the desire to sell news. can
The interest rate on this debt is 7%. Assume the corporate tax rate is 21%. What is carpet company's WACC?
Shortly after you were given this task, you became aware of a new CMO issue that has an AA-rated, 7-year Class A VADM tranche, with a 7.00% coupon that uses a Z bond to protect against prepayment and extension risk. Write a second memo to your bos..
Davis and Davis have expected sales of $490, $465, $450, and $570 for the months of January through April, respectively. The accounts receivable period is 28 days. What is the accounts receivable balance at the end of March? Assume a year has 360 ..
What is a lower bound for the price of a 4-month call option on a non-dividend-paying stock when the stock price is $28, the strike price is $25, and the risk-free interest rate is 8% per annum?
The treasurer of a major U.S. firm has $40 million to invest for three months. The interest rate in the United States is .28 percent per month. The interest rate in Great Britain is .32 percent per month. The spot exchange rate is £.639, and the thre..
Compute the (a) NPR,9b) IRR, (c) MIRR, and (d) DPB for each of the following projects.
how long were Robinson's operating cycles and cash conversion cycles in each of these years? what caused them to change during this time?
In his Pecking Order Theory, Stewart Myers argues that managers should consider the "cost" of obtaining various types of external financing in selecting.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd