Showing 1009–1017 of 1959 results

  • U.S. investors have $1,000,000 to invest

    $2.00

    Assume the following information:

    U.S. investors have $1,000,000 to invest
    1-year deposit rate offered on U.S. dollars = 12%
    1-year deposit rate offered on Singapore dollars= 10%
    1-year forward rate of Singapore dollars = $0.412
    Spot rate of Singapore dollar = $0.400

    Should a U.S. based investor Covered interest arbitrage and invest in Singapore? Answer

    • Yes because the return would be 14.23%
    • No because the return would be 14.23%
    • Yes because the return would be 13.3%
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  • Gateway Communications is considering a project…

    $2.00

    Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $300,000. The project will not directly produce any sales but will reduce operating costs by $725,000 a year. The tax rate is 35 percent. The project will require $45,000 of inventory which will be recouped when the project ends. Should this project be implemented if the firm requires a 14 percent rate of return? Why or why not?

    A. No; The NPV is -$172,937.49.

    B. No; The NPV is -$87,820.48.

    C. Yes; The NPV is $251,860.34

    D. Yes; The NPV is $466,940.57

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  • Margerit is reviewing a project with projected sales of 1,500 units…

    $1.00

    Margerit is reviewing a project with projected sales of 1,500 units a year, a cash flow of $40 a unit and a three year project life. The initial cost of the project is $95,000. The relevant discount rate is 15%. Margerit has the option to abandon the project after one year at which time she feels she could sell the project for $60,000. At what level of sales should she be willing to abandon the project?

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  • Part One: External Funding Requirement

    $5.00

    Part One: External Funding Requirement

    Your company, Martin Industries, Inc., has experienced a higher than expected demand for its new product line. The company plans to expand its operation by 25% by spending $5,000,000 for an additional building.

    The firm would like to maintain its 40% debt to total asset ratio in its capital structure and its dividend payout ratio of 50% of net income. Last year, net income was $2,500,000.

    Required:

    • What are retained earnings for last year?
    • How much debt will be needed for the new project?
    • How much external equity must Martin use at the beginning of this year in order to finance the new expansion?
    • If Martin decides to retain all earnings for the coming year, how much external equity will be required?
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  • Archer Daniels Midland Company is considering buying a new farm…

    $2.00

    Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.90 million for land and $8.90 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.02 million, $2.35 million above book value. The farm is expected to produce revenue of $2.02 million each year, and annual cash flow from operations equals $1.92 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent.

    Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)

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  • Using a 5% discount rate, calculate the Net Present Value

    $5.00

    Part 1

    Using a 5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer. Project 1 Initial Invest= $500,000, Cash inflows of $100,000 for years 1-5 and $50,000 for years 6-10. Project 2 Initial Invest= $1,000,000, Cash inflows of $400,000 for years 1-3, $0 for years 4-7 and $250,000 for years 8-10. Project 3 Initial Invest= $800,000, Cash inflows of $300,000 for years 1-5, $0 for years 6-9 and $100,000 for year 10.

    Part 2

    • Assuming a budget of $1,200,000 what are your recommendations for the three projects in the above problem. Explain.
    • Assuming a budget of $2,000,000 what are your recommendations for the above problem? Explain.
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  • Suppose we are thinking about replacing an old computer with a new one…

    $10.00

    Suppose we are thinking about replacing an old computer with a new one. The old one cost us $450,000; the new one will cost $580,000. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $130,000 after five years. The old computer is being depreciated at a rate of $90,000 per year. It will be completely written off in three years. If we don’t replace it now, we will have to replace it in two years. We can sell it now for $230,000; in two years it will probably be worth $60,000. The new machine will save us $85,000 per year in operating costs. The tax rate is 38 percent, and the discount rate is 14 percent.

    • Calculate the EAC for old and new computer.
    • What is the NPV of the decision to replace the computer now?
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  • The managers of a firm are asked to consider two possible new product lines…

    $1.00

    The managers of a firm are asked to consider two possible new product lines for the firm . Project 1 is quite risky and may result in a market value for the firm of $50 million in two Years ,or nothing .Project 2 is much more certain in outcome and may result in a firm market value as high as $25 million or as low as $15 million.

    The face value of the company s debt ,payable in two years is $20 million

    a- What are the possible payoffs to the bondholders under projects 1 and 2

    b- What are the possible payoffs to the shareholders under project s 1&2

    c- Which will the shareholders favor? The bondholders?

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  • Justification Report Understanding the Report Process and Research Methods

    $27.50

    You will be building up a formal, researched justification report that culminates in a recommendation to implement a particular product, service, or program in your place of employment. This recommended product, service, or program should resolve a problem that you identify in your workplace and should be directed to your employer (even if you do not actually plan to share it with your employer).
    Use the basic outline below to draft your paper. Organize your responses to each question under the following section headings:

    • Problem Statement (for Question 1)
    • Overview of Alternatives (for Question 2)
    • Criteria (for Question 3)
    • Methods (for Question 4)

    Write a 7 page, double-spaced report in which you:

    1. Describe in detail a problem at work, persuading and convincing the reader that it needs fixing.
    2. Provide a detailed description of two (2) possible solutions (“alternatives”) that could be implemented to resolve the problem identified in Question 1.
    3. Describe five (5) criteria that you will use to measure the worth of each alternative in Criterion 2. Note: The alternative that satisfies the most criteria to the highest degree will be the one you recommend later to your employer. Criteria are standards that the audience values and are therefore used to measure the worth of each alternative (common examples include cost, desirability, durability, efficiency, time it will take to implement, and practicality).
    4. Describe in detail how you will conduct the research needed to determine the best recommended alternative to your employer
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