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Schweser Satellites Inc. produces satellite earth stations that sell for $95,000 each. The firm's fixed costs, F, are $2 million, 50 earth stations are produced and sold each year, profits total $600,000; and the firm's assets (all equity financed) are $6 million. The firm estimates that it can change its production process, adding $4.5 million to investment and $530,000 to fixed operating costs. This change will (1) reduce variable costs per unit by $7,000 and (2) increase output by 24 units, but (3) the sales price on all units will have to be lowered to $88,000 to permit sales of the additional output. The firm has tax loss carry forwards that render its tax rate zero, its cost of equity is 12%, and it uses no debt. What is the incremental profit? $ To get a rough idea of the project's profitability, what is the project's expected rate of return for the next year (defined as the incremental profit divided by the investment)? Round your answer to two decimal places. %
Calculate patient revenue on accrual basis for the coming year. Subdivide revenue by program, and within each program subdivide it by type of payer.
Big sky mining company must install 1.5 million of new machinery in its Nevada mine. it can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. assume that the following facts apply. under either the lease or the purchas..
In a world with taxes and bankruptcy costs, and in which interest on debt is tax deductible, if a firm has some debt:
Why is paying your credit card balance in full so important? What should you do if you can't avoid credit card debt? Explain.
Define the term "capital intensity." Assuming all other elements are held constant, how would a decline in the capital intensity of a firm affect additional funds needed (AFN)? Would economies of scale combined with rapid growth affect capital in..
Consider two mutually exclusive projects with the following cash flows: Project S is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 1500, 1200, 800 and 300 respectively. Project L is a 4 year project ..
You read in The Wall Street Journal that 30-day T-bills are currently yielding 4.2%. what is the real risk-free rate of return?
If the risk-free rate is 4 percent and the expected return on the market is 12 percent, what is the company's cost of equity capital?
Assume that you can buy a $6,600 computer system in monthly installments for 3 years.
If the risk-free rate of interest is 6 percent, calculate the market price of the at-the-money put and call options on this stock that expire in one year.
What is the price of a $1,000 face value bond if the quoted price is 103.1?
The discount rate that your firm uses for projects of this type is 12%. How much would the NPV change if discount rate increases to 8%?
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