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Kingston, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and
A bond has 14 years left to maturity. It pays $40 semi-annual coupon and a par value of $1,000. The bond is callable in 5 years at a call price of $1050. The price of the bond is $1,075 as of today.
Preston Industries has two separate divisions. Each division is in a separate line of business. Division A is the largest division and represents 70 percent of the firm's overall sales. Division A i
The probability of a recession is 25 percent while the probability of a boom is 10 percent. What is the standard deviation of the returns on this stock?
A project that provides annual cash flows of $28,500 for nine years costs $138,000 today. If the required return is 8 percent, the NPV for the project is $ ____and you would accept the project.
Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you require a 10 percent nominal yield to maturity on this inves
What set of assumptions regarding Home Depot's future growth rate, NOPAT margin, are consistent with its observed stock price of $48.20 on February 1, 2001? Assume that all the other assumptions rem
Consider a mutual fund with $300 million in assets at the start of the year, and 12 million shares outstanding. If the gross return on assets is 18% and the total expense ratio is 0.75% of the year
Prepare the strengths and weaknesses of the various measures of investment decisions as used by Euroland Foods. Will all of the measures rank the projects identically? Why or why not?
Find the closest break-even discount rate (IRR) for the following project. The project costs $70,000 today and produces an incremental after-tax cash flow of $9,000 for each of the next 12 years.
Assume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $0.90; P0 = $30.00; and g = 7.00% (constant). Based on the DCF approa
Which of the following is true regarding the evaluation of projects?
Haig Aircraft is considering a project which has an up-front cost paid today at t = 0. The project will generate positive cash flows of $60,000 a year at the end of each of the next five years. The
You are an analysts comparing the performance of two portfolio managers using the Sharpe Ratio measurement. Manager A shows a return of 16% with a standard deviation of 10%. Manager B shows a return
The probability of a normal economy is 80 percent while the probability of a recession is 20 percent. What is the variance of the returns on this stock?
What is the value of a stock with high growth then constant growth, dividends of $2.50, $3.50, and $5.00, constant growth at 3.5% and a required return of 8%?
The IRR for the following set of cash flows is ____percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))
You bought one of Great White Shark Repellant Co.'s 8 percent coupon bonds one year ago for $1,030. These bonds make annual payments and mature six years from now.
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, -12 percent, 11 percent, 38 percent, and 14 percent.
Ace Industries has current assets equal to $3 million. The company's current ratio is 1.5, and its quick ratio is 1.0. What is the firm's level of current liabilities? $2,000,000 What is the firm's
Jenningston Mills has a market value equal to its book value. Currently, the firm has excess cash of $1,200, other assets of $5,800, and equity valued at $3,750. The firm has 250 shares of stock out
A portfolio has 180 shares of Stock A that sell for $45 per share and 140 shares of Stock B that sell for $27 per share. The weight of A is ___percent and the weight of B is ___percent.
A stock has had returns of 3 percent, 38 percent, 21 percent, -15 percent, 29 percent, and -13 percent over the last six years. The arithmetic and geometric returns for the stock
Inventory and accounts receivable will increase $420,000 to accommodate this sales level. The company has a steady profit margin of 10 percent with a 25 percent dividend payout. How much external fi
Stock Y has a beta of 1.3 and an expected return of 18.5 percent. Stock Z has a beta of .70 and an expected return of 12.1 percent. If the risk-free rate is 8 percent and the market risk premium is