Antonio's is analyzing a project with an initial cost of $30,000 and cash inflows of $27,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt and common stock to finance their operations and maintains a debt-equity ratio of 0.4. The pre-tax cost of debt is 9.4 percent and the cost of equity is 12.2 percent. The tax rate is 34 percent. What is the projected net present value of this project?
suppose $40,000 was invested on January 1, 1980 at an annual effective interest rate of 7% in order to provide an annual(calendar year) scholarship of $5,000 each year forever, the scholarship paid out each January 1. What smaller scholarship can be awarded the year prior to the first $5,000 scholarship?
Shao Airlines is considering two alternative planes. Plane A has an expected life of 5 years, will cost $100 million and will produce net cash flows of $28 million per year. Plane B has a life of 10 years, will cost $132 million and will produce net cash flows of $27 million per year. Shao plans to serve the route for only 10 years. Inflation in operating costs, airplane costs, and fares is expected to be zero, and the company's cost of capital is 9%.
By how much would the value of the company increase if it accepted the better project (plane)? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
What is the equivalent annual annuity for each plane? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to two decimal places. Plane A: Plane B:
Multiple Choice Questions 1. The concept that different sums of money at different points in time can be said to be equal to each other is known as: (a) Evaluation criterion (b) Equivalence (c) Cash flow (d) Intangible factors 2. The evaluation criterion that is usually used in an economic analysis is: (a) Time to completion (b) Technical feasibility (c) Sustainability (d) Financial units (dollars or other currency) 3. All of the following are examples of cash outflows, except: (a) Asset salvage value (b) Income taxes (c) Operating cost of asset (d) First cost of asset 4. In most engineering economy studies, the best alternative is the one that: (a) Will last the longest time (b) Is most politically correct (c) Is easiest to implement (d) Has the lowest cost 5. At an interest rate of 10% per year, the equivalent amount of $10,000 one year ago is closest to: (a) $8264 (b) $9091 (c) $11,000 (d) $12,000 6. Assume that you and your best friend each have$1000 to invest. You invest your money in a fund that pays 10% per year compound interest. Your friend invests her money at a bank that pays 10% per year simple interest. At the end of 1 year, the difference in the total amount for each of you is: (a) You have $10 more than she does (b) You have $100 more than she does (c) You both have the same amount of money (d) She has $10 more than you do 7. All of the following are examples of equity financing, except: (a) Mortgage (b) Mone
You lost a lawsuit and owe someone 10 000 You offer
You lost a lawsuit and owe someone $10,000. You offer to pay them $1,000 a year for 10 years. They agree to spreading your payments over time, but only if you pay $1,000 a year for 12 years. Why did they make this counteroffer?
You lost a lawsuit and owe someone 10 000 You offer
The invention of the computer is the major factor behind the decline of the banking industry. Is this statement true, false, or uncertain? Explain your answer.
Company X has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value $90 million, has a coupon of 5 percent, and sells for 94 percent of par. The second issue has a face value of $70 million, has a coupon of 6 percent, and sells for 104 percent of par. The first issue matures in 20 years, the second in 3 years.
a. What are Company X'x capital structure weights on a book value basis?
b. What areCompany X's capital structure weights on a market value basis?
c. Which are more relevant and why? (Show work)
The following balance sheet accounts (in millions of dollars) have been taken from the annual report for a U.S. bank. Arrange the accounts in balance sheet order and determine the value of total assets. Based on the balance sheet structure, would you classify this bank as a community bank, regional bank, or a money center bank? ( LG 11-6 )
We are considering the introduction of a new product. Currently we are in the 34% tax bracket with a 15% discount rate. This project is expected to last five years and then, because this is somewhat of a fad project, it will be terminated. The following information describes the new project: <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> Cost of new plant and equipment: $ 7,900,000 Shipping and installation costs: $ 100,000 Unit sales: Year Units Sold 1 70,000 2 120,000 3 140,000 4 80,000 5 Sales price per unit: $300/unit in years 1Af?cAc‚¬"4 and $260/unit in year 5. Variable cost per unit: $180/unit Annual fixed costs: $200,000 per year
Working capital requirements: There will be an initial working capital requirement of $100,000 just to get production started. For each year, the total investment in net working capital will be equal to 10% of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4.Finally, all working capital is liquidated at the termination of the project at the end of year 5. Depreciation method: Straight-line over 5 years assuming the plant and equipment have no salvage value after 5 years.
I need a cash flow diagram for this project..
The price of a three-year zero-coupon government bond is 85.16. The price of a similar four-year bond is 79.81. What is the one-year implied forward rate from year 3 to year 4?
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