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A five-year project has an initial fixed asset investment of $315,000, an initial NWC investment of $31,000, and an annual OCF of −$30,000. 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.)
Equivalent annual cost $
Describe the type of dividend policy the firm uses. Would you recommend an alternative dividend policy? Explain. How would this policy affect the break points and imminent impact on investments recommended in part 2(E)?
Barnes Enterprises has bonds on the market making annual payments, with 18 years to maturity, a par value of $1,000, and a price of $960. At this price, the bonds yield 8.7 percent. What must the coupon rate be on the bonds?
What is the firm's market value capital structure? What rate should the firm use to discount the project's cash flows?
Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $284,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years..
A 6.60 percent coupon bond with 15 years left to maturity is priced to offer a 5.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What would be the total return of the bond in dollars? What would b..
Belton is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 15 years. Investors are willing to pay $ 958 for the bond.. The company is in an 18 percent tax bracket. What will be the firm's best after-tax cost of debt ..
Financial manager has to consider many different risk factors in risk management analysis of the project. CFO article (Link to CFO Article "EuroZone Risk management") discusses risk management by companies doing business in Eurozone.
For this discussion, assume that you are an investor and considering the buyout of an existing publicly traded company. There are several areas you plan to focus on during your due diligence process in order to determine the organization's potential ..
Volbeat Corp. shows the following information on its 2015 income statement: sales = $251,000; costs = $156,000; other expenses = $7,900; depreciation expense = $18,400; interest expense = $14,400; taxes = $19,005; dividends = $11,500. What is the 201..
Mini Case Analysis: Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implants as follows: Production of the implants will require $1,500,000 in net working capital to start and additional net working capital ..
Suppose the real rate is 3.4 percent and the inflation rate is 5.0 percent. What rate would you expect to see on a Treasury bill?
Consider an asset that costs $431,200 and is depreciated straight-line to zero over its 10-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $53,900. If the relevant tax rate is 33 percen..
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