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A five-year project has an initial fixed asset investment of $295,000, an initial NWC investment of $27,000, and an annual OCF of −$26,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 12 percent, what is this project’s equivalent annual cost, or EAC? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Suppose we have the following returns for large-company stocks and Treasury bills over a six year period: Year Large Company US Treasury Bill 1 3.66 4.66 2 14.44 2.33 3 19.03 4.12 4 –14.65 5.88 5 –32.14 4.90 6 37.27 6.33 c-2 Calculate the observed ri..
Shelly Inc. bonds have a coupon rate of 10%. The bonds mature in 10 years. Their par value is $1,000 if your required rate of return is 12%. What is the difference in value of the bond if its coupon is paid semiannually compared to annually?
An asset has had an arithmetic return of 10.8 percent and a geometric return of 8.8 percent over the last 86 years. What return would you estimate for this asset over the next 7 years? 21 years? 28 years?
In response to the financial crisis of 2007, the Federal Reserve has maintained near-zero interest rates for the past several years. The Fed has kept rates low due to slow economic and employment growth during the past few years. Suppose the Fed rais..
A thrift has an annual CGAP of -$25 million. A credit union has an annual CGAP of +$5 million. The thrift has total assets of $500 million and net income of $7.5 million and the credit union has total assets of $40 million and net income of $0.7 mill..
The Poseidon Swim company produces swim trunks. The average selling price for one of their swim trunks is $38. The variable cost per unit is $25. Poseidon swim has average fixed costs per year of $35,194.
Rocky Sales, Inc., has current sales of $1,268,864 and net income of $203,018. It also has a debt ratio of 47 percent and a dividend payout ratio of 69 percent. The company’s total assets are $587,439. What is its sustainable growth rate? (Round answ..
The total book value of the firm’s equity is $20 million; book value per share is $40. The stock sells for a price of $30 per share, and the cost of equity is 12%. The firm’s bonds have a face value of $8 million and sell at a price of 115% of face v..
You find a certain stock that had returns of 11 percent, −14 percent, 23 percent, and 19 percent for four of the last five years. The average return of the stock over this period was 10.48 percent. What was the stock’s return for the missing year? Wh..
An all equity business has 100million shares outstanding selling for $20 a share. Management believes that interest rates are unreasonably low and decides to execute a leveraged recapitalization. It will raise $1 billion in debt and repurchase 50 mil..
Ahmad Oil Refinery, Inc. owns an crude oil pipeline. The current production of oil is at the rate of 100 million barrels a year. The current price of crude oil is about $100 a barrel and is rising at the rate of 5% per year forever. Oil reserves are..
For this assignment, each student will find an organization of his or her choosing or any organization of his or her choice that has recently experienced a merger or an acquisition. discuss the organization’s success or failure; was the merger a good..
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