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KADS, Inc., has spent $370,000 on research to develop a new computer game. The firm is planning to spend $170,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $47,000. The machine has an expected life of three years, a $72,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $570,000 per year, with costs of $220,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 11 percent, and it expects net working capital to increase by $85,000 at the beginning of the project.
What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
You invest $1,000 in Xenon Corporation stock (10 shares at $100 per share) and another $1,000 in a Xenon Corporation bond (1 bond with a $1,000 face value) that pays 8% interest annually. Xenon has a phenomenal year and distributes $5 per share to it..
You are given the following information for Gandolfino Pizza Co.: sales = $42,000; costs = $22,100; addition to retained earnings = $4,900; dividends paid = $1,600; interest expense = $4,500; tax rate = 35 percent. Calculate the depreciation expense.
Parents and politicians in some school districts in the U.S. want creationism or intelligent design to be taught in science classes as theories that are as justified as evolution, and they think the students themselves should be given the choice to d..
Which one of the following is an argument against repricing employee stock options? ESO's are originally issued with positive intrinsic value so there's no reason to reprice. Employees have more incentive when options are "under-water".
Explain what the first two sentences in this excerpt mean: What is the connection between the relative prices of these two types of firms and their cost of raising capital?
How dollar cost averaging affects your investment portfolio when living off the portfolio’s proceeds in retirement. How dollar cost averaging affects your investment portfolio when accumulating assets toward retirement. What QE is, and how it affects..
Define Indifference Curve and what are the main properties of Indifference Curve? By using Indifference Curve analysis explain how the consumer attains maximum level of satisfaction?
General Mills has a $1,000 par value, 29-year to maturity bond outstanding with an annual coupon rate of 11.56 percent per year, paid semiannually. Market interest rates on similar bonds are 11.27 percent. Calculate the bond’s price today.
Suppose a platinum mining firm sells Mrs. Fiske 1 warrant. The firm has 2 shares outstanding. Mr. Gould owns one share and Ms. Rockefeller owns the other share. What was the price of the firm’s stock before the warrant was sold? What is the lowest pl..
Suppose a stock had an initial price of $72 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $61. Compute the percentage total return. What was the dividend yield and the capital gains yield?
Gilmore, Inc., just paid a dividend of $2.60 per share on its stock. The dividends are expected to grow at a constant rate of 5.75 percent per year, indefinitely. Assume investors require a return of 12 percent on this stock. What is the current pric..
Lawler's is considering a new project. The company has a debt-equity ratio of 0.62. The company's cost of equity is 15.1 percent, and the aftertax cost of debt is 8.8 percent. The firm feels that the project is riskier than the company as a whole and..
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