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The project requires $36,000 of fixed assets that will be depreciated on a straight-line basis to a zero book value over the 5-year life of the project. The salvage value of the fixed assets is $8,4
Paul Bearer may elect to take a lump-sum payment of $25,000 from his insurance policy. How long must Paul anticipate living for the annuity to be preferable to the lump sum if his opportunity rate i
ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return i
A 40 year old man no longer qualifies for aditional IRA. If he expects them to earn interest at 7.5% compunded annually how much can he expect to have when he retires at age 62?
The ABC Corporation has cash outflows of $100 per day, seven days a week. The interest rate is 5%, and the fixed cost of replenishing cash balances is $10 per transaction. What is the optimal cash b
ABC Corp. (an American company) has contracted to buy 50,000 tons of iron from a German firm. Suppose that iron trades for 87 euros/ton and the exchange rate is .67USD/E when the payment is due. Ho
If the current market rate is 12%, what would be the current value of the bond (assume semiannual interest payments)?
ABC Inc. has a beta of 1.5. The risk-free rate of return is 4.5% and the market risk premium is 6.5%.
To save for her newborn son's college education, Lea Wilson will invest $1,000 at the beginning of each year for the next 18 years. The interest rate is 12 percent. What is the future value?
If the tax rate is 40 percent, what is the aftertax salvage value of the asset?
Why do we focus on cash flows rather than net income in capital budgeting? Is operating cash flow the same as EBITDA (Earnings before interest taxes, depreciation and amortization)?
You have been asked to make a short presentation at your company's annual capital budget meeting to present an analysis of the strengths and weaknesses of the following capital budgeting selection
Determine the net present value of a machine that makes little plastic boxes to hold a variety of playing cards. the machine requires an intital investment of $750,000.
The truck will have no effect on revenues, but it is expected to save the firm $123,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 35 percent. What will th
The 6 percent preferred stock of office max is selling for $62 a share. What is the firm's cost of preferred stock if the tax rate is 34 percent and the par value per share is $100?
You purchase machinery for $23,958 that generates cash flow of $6,000 for five years. What is the internal rate of return on the investment?
Assume you are comparing two firms that are identical in every aspect, except one is levered and one is unlevered. Which one of the following statements is correct regarding these two firms?
A $5000 bond with a coupon rate of 5.4% paid semiannually has five years to maturity and a yield to maturity of 7.5%. If interest rates falls and the yield to maturity decreases by 7.8% , what will
Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak. What is the standard deviation of the company's expected stock return?
Beach Control Systems will invest $90,000 in a temporary project tat will generate the following cash inflows for the next three years.
Jim Angel holds a $200,000 portfolio consisting of the following stocks. What is the portfolio's beta?
Assume a corporation has earnings before depreciation and taxes of $116,000 depreciation of $44,000 and is in a 30 percent tax bracket.
$75,000 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is his portfolio's beta?
If the bonds have a par value of $1,000 and are currently selling for $1,160, what is the approximate yield to maturity on the bonds?
Find the accumulated amount at the end of 8 month on a $1200 bank deposit paying simple interest at a rate of 7% year.