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At mid-year, the division manager increased scheduled annual production by 5,000 units. This decision has no effect on scheduled sales.
The division's variable costs were 45 percent of sales, and fixed costs were $6,750,000.
The following 2010 information is available for Cornwall Industries-average assets invested $7,200,000; revenues, $26,400,000.
The fair value of invested capital in your division is $20,000,000, the required return on capital is 10 percent, and the tax rate is 40 percent.
Calculate and analyze the ratios for your selected company for the last two years from the SEC Form 10-K.
Determine the expected value of the project's net present value. Determine the probability that the project's NPV will be negative.
Should it attach a cost to re?ect this possibility or increase the discount rate when estimating the net present value? Explain.
Compute the expected NPV of the project and make a recommendation to Monk regarding its feasibility.
It would require an initial investment of 5 million yuan. It is expected to generate cash ?ows of 7 million yuan at the end of one year.
The initial outlay is $7 million. Slidell has a required return of 18 percent.
If the ?rm does decide to develop a small subsid- iary in the United Kingdom, will its exposure to country risk change? If so, how?
What factors would have caused Goshen to increase its ?nancial leverage .
Explain why managers of a wholly owned subsidiary may be more likely to satisfy the shareholders of the MNC.
Pullman would like to ?nance the growth with local debt in the host countries of concern to reduce its exposure to country risk.
The firm's before-tax cost of debt is 12 percent, and its cost of financing with equity is 15 percent.
Currently, Treasury bonds yield 2 percent. Based on this information, what is Wiley's estimated cost of equity?
Blues would like to estimate its weighted average cost of capital. On average, bonds issued by Blues yield 9 percent.
Charleston decides to establish the subsidiary in the United Kingdom because of the revenue advantage. Do you agree with its decision? Explain.
Given the strategy to be used by Forest, explain how its exposure to exchange rate risk may have changed.
What is a key disadvantage of using this strategy that may cause Fair?eld to be no better off than if it paid the 90 percent interest rate?
Explain why Carazona's cost of equity in Indonesia would not be less than Carazona's cost of debt in Indonesia.
Zylon's cost of equity is based on the CAPM. It ex- pects that the U.S. annual market return will be 12 percent per year. Its beta is 1.5.
Orlando expects that the U.S. annual stock market return will be 10 percent per year, and the Thai- land annual stock market return will be 28 percent per year.
Nebraska requires a rate of return of at least 20 percent on its invested equity for this project to be worthwhile. Determine the NPV of this project.
Texas Co. produces drugs and plans to acquire a subsidiary in Poland. This subsidiary is a lab that would perform biotech research.