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Nova Corp. has a WACC of 10%. It is evaluating the purchase of a new machine and must choose between two mutually exclusive projects. The first machine, Machine A, requires an initial investment of $14,000 and generates after tax cash flows of $3,000 for each of the next seven years. The second machine, Machine B, requires an initial investment of $21,000 and provides annual after tax cash flows of $4,000 for each of the next 10 years. What is the payback period for each machine? According to the payback method, which machine should the firm buy? Why? 22. a. What drawbacks of using the payback method are illustrated in the previous question? b. What are the positive points of using payback? How can it be helpful to the manager? 23. Paine Corp.'s last annual common stock dividend was $3.75. Dividends have been growing at a rate of 8% and that rate is expected to continue. If the investors required rate of return is 16%, what is the value of Paine Corp. common stock?
If John suppose his investments would earn 8% annually, and his life expectancy is 80 years, must he invest in his own plan or must he make contributions to his employer's fund?
Calculate the return (in percent) for each value of b. (Note: you may just calculate the total return and not worry about how this is split between current yield and capital-gains yield.)
How much would they be willing to pay today (quarter 0) for this stock (i.e, for receiving this stream of dividend payments)?
Jeremy Kohn is planning to invest in a 10-year bond that pays a 12 percent coupon. The current market rate for similar bonds is 9 percent. Assume semi-annual coupon payments.
Evaluate the term Capital budgeting and What is the yield to call of Hood Corporation's bonds
What are brand equity and customer equity? What are the advantages and disadvantages of each?
A company sells two products, one call slingers and the other called widgets. The company has a fixed cost of $50,000.00 each year. Each slinger costs $4 to produce but can be sold in the market for $9.
Discuss the contribution margin, and why is it important for managers to know the contribution margins of their products and How much will profits increase for every unit sold over the break-even point?
Explain the major differences between a fixed and a flexible budget.
Describe Dividend decisions for the existence of dividend clienteles by measuring the average decline in stock price when the stock goes ex-dividend
A firm stock is selling at $95.00 per share. Its growth rate is 10% and investors demand is 15% on this stock. What is the firms expected dividend?
Each year, rare coins increase in price at a three percent rate. She believes that if she invests her money for one year, she should be able to buy 26 coins for what 25 coins would cost today. What is her real interest rate or reward for waiting?
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