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Your firm is considering an overseas expansion. Below is the information that you have been given regarding the project: Initial Equipment Cost: $100m. Life of System: 5 years. Depreciation method: Straight line Depreciation. Expected overseas sales: $110m per year. Raw materials: $70m per year. Salaries for new workers: $20m per year. Net Working Capital necessary for plant to operate effectively: $25m (assume that this investment is required at the start of the project and is recovered when the plant shuts down after 5 years.) Marginal Tax Rate on income and capital gains: 40% Expected salvage value of equipment after 5 years: $30m. What will be the cash flows of this project in millions? -125/32/32/32/32/75 -100/26.5/26.5/26.5/26.5/81.5 -100/9.1/9.1/9.1/9.1/28.6 -125/26.5/26.5/26.5/26.5/71 -125/26.5/26.5/26.5/26.5/81.5
A bond with a coupon rate of 9 percent sells at a yield to maturity of 11 percent. If the bond matures in 15 years, what is the Macaulay duration of the bond? What is the modified duration?
A company has performed an inventory analysis and has found that on average it holds 8 000 units of inventory, including safety stock of 2000 units. Fixed cost per order is 425 euros and the company makes orders 20 times a year. How many units of inv..
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Assume that the YTM remains the same for the next three years, what will be the price of the bond 3 years from today?
McIntire Corp. is considering the issue of $1,000 face value, 20 year, 9 percent coupon bonds. The bonds will make coupon payments on a semi-annual basis. It observes that bonds of Barrett Company are trading at $1079.31, have the same maturity date ..
The Starr Co. just paid a dividend of $1.80 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year, indefinitely. Investors require a return of 11 percent on the stock. What will the price be in three year..
Should Elio joint venture with Bostrom? Should it partner with a tier-one or a tier-two automotive supplier?
Dewey Cheatem deposited $25,000 into a savings account. This savings account pays 8% annual interest compounded semi-annually. Beginning a year from now and continuing in perpetuity, equal annual withdrawals are to be made. What is the maximum amount..
What percentage the terminal value contributes to the total enterprise value? How sensitive is your valuation to inputs?
A perpetuity immediate has quarterly payments $5000 with a nominal annual interest rate of 4% compounded quarterly. The payments are distributed in the following fashion. Determine the present value of Pats payments. Determine the percent Pat's prese..
Halliford Corporation expects to have earnings this coming year of $3.241 per share. what price would you estimate for Halliford? stock?
Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one.
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