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Your company has spent $270,000 on research to develop a new computer game. The firm is planning to spend $47,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,700. The machine has an expected life of 10 years, a $32,000 estimated resale value, and falls under the MACRS 15-Year class life. Revenue from the new game is expected to be $370,000 per year, with costs of $170,000 per year. The firm has a tax rate of 30 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $57,000 at the beginning of the project. What will be the net cash flow for year one of this project?
The project's cost and expected annual cash flows would be the same whether the project is delayed or not. The project's WACC is 11.0%. What is the value (in thousands) of the option to delay the project?
Objective type questions on cost of capital and capital structure and Which one of the following means of management compensation is designed to help eliminate the agency problem
Conduct a sensitivity analysis by allowing investment, sales, variable costs, and fixed costs to vary by PLUS 10% and MINUS 10% from their original estimates. Which variable most impacts profitability?
Would a supply chain make sense in regional production as backup facilities to China? For example, having facilities in Europe and South America to become cost effective in competition with Asia should a disaster strike? Explain.
Using an EVA analysis, should Laidlaw acquire the new piece of equipment?
If Yurdone requires a return of 10 percent on such undertakings, should the firm accept or reject the project?
What is Capital budgeting and assess the conclusions we might make about the wisdom of undertaking this project
If it does so, unit sales would remain unchanged and $5of the$9 per unit costs assigned to Product A would be eliminated . Should the company continue to manufacture Product A or purchase Product B for resale?
As a result, the company's earnings and dividends are declining at the constant rate of 5% per year. If D0 = $6 and rs = 18%, what is the value of Brushy Mountain's stock? Round your answer to the nearest cent.
Community Hospital has yearly net patient revenues of 150 million dollar. At present time, payments received by the hospital are not deposited for six days on average.
Consider a European call option on a non-dividend-paying stock where the stock price is $40, the strike price is $40, the risk-free rate is 4% per annum, the volatility is 30% per annum, and the time to maturity is six months.
If a company can expect an extra $2 million in sales if it enters a new market and it knows that 15 percent of its sales will be uncollectible, collection costs will be 2 percent on all new sales,
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