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The use of the new computer, net income will increase by $5,000 a year. If depreciation expense is $3,000 a year, the cash payback period is?
A company rents 40,000 square feet of space and is using 30,000 square feet for its present operations. It wishes to add a new division that will use the remaining 10,000 square feet.
If the project has estimated net annual cash flows of $12,000 for the next six years, what is the profitability index for the project?
2013-$18,000; 2014-$19,000; and 2015-$20,000. If the discount rate is 6%, what is the present value of the future cash inflows?
Assume a retention ratio of 0.45 and a historical return on equity (ROE) of 0.18. Using these two additional pieces of information, calculate an alternative estimate of dividend growth rate, g.
You own a portfolio that is 20% invested in Share X, 45% in Share Y and 35% in Share Z. The expected returns on these three shares are 10%, 14% and 16%, respectively. What is the expected return on
An adjustment factor of +10% to the cost of capital for such risky projects. Under what circumstances should Photosynthesis take on the project?
What is the dollar flotation cost of the proposed financing? After considering flotation costs, what is the NPV of the proposed project?
You own a portfolio that has $700 invested in Alpha Ltd and $2 500 invested in Better Ltd. If the expected returns on these firms are 10% and 16%, respectively, what is the expected return on the p
If the expected T-Bill rate is 5% and the expected inflation rate is 2.50%, what are the approximate and exact expected real risk premiums on the portfolio?
The 2009 balance sheet of Anna's Tennis Shop Ltd showed current assets of $840 and current liabilities of $320. The 2010 balance sheet showed current assets of $910 and current liabilities of $335.
Crock Hunters wishes to maintain a growth rate of 8% a year, a debt-equity ratio of 0.45 and a dividend payout ratio of 25%. The ratio of total assets to sales is constant at 1.40. What profit margi
What is the portfolio expected return and the portfolio beta if you invest 30% in A, 30% in B, and 40% in the risk-free asset?
You can earn 0.45% per month at your bank. If you deposit $1500, how long must you wait until your account has grown to $3600?
Determine the expected return and variance of a portfolio that contains 78% security A and 22% security B. Is this portfolio superior to that one in (a) above?
An investment offers to triple your money in twenty-four months (do not believe it). What rate per three months are you being offered?
Suppose we have two assets, A and B. What correlation levels between the two assets will yield diversification benefits in terms of portfolio risk reduction?
United Ratio"s common stock has a dividend yield of 4 percent. Its dividend per share is $2, and it has 10 million shares outstanding. If the market-to-book ratio is 1.5, what is the total book val
The returns on XYZ Corp. over the last four years are 10%, 12%, 3%, and -9%. What is the historical average return over the last four years?
Suppose you decide to sell your bonds today, when the required return on the bonds is 10%. If the inflation rate was 4.2% over the past year, what would be your total real return on investment?
Explain the interactions among market efficiency, capital budgeting, and the cost of capital. Give two examples of anomalies in the financial markets.
Wellington Boots Ltd is an all equity-financed firm that has $5 400 000 of equity finance consisting of 3 000 000 ordinary shares outstanding.
If EBIT is $5 million, which plan will result in the higher EPS? What is the break-even EBIT?
Margaret River Wines (MRW) has a project available that will provide after-tax cash flows of $215 000 for the next eight years.