All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Hire a Tutor
AI Study Help New

Search
Sign In
Register

study help
business
corporate finance

Questions and Answers of Corporate Finance

Calculating Depreciation A piece of newly purchased industrial equipment costs $925,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and
Calculating Salvage Value Consider an asset that costs $468,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of
Calculating Salvage Value an asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $8,400,000 and will be sold for $1,750,000 at
Calculating Project OCF Phone Home, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $4.2 million. The fixed asset will be depreciated
Calculating Project NPV In the previous problem, suppose the required return on the project is 12 percent, what is the project’s NPV?
Calculating Project Cash Flow from Assets In the previous problem, suppose the project requires an initial investment in net working capital of $300,000 and the fixed asset will have a market
NPV and Modified ACRS In the previous problem, suppose the fixed asset actually falls into the three-year MACRS class. All the other facts are the same. What is the project’s year 1 net cash flow
Project Evaluation Dog Up! Franks is looking at a new sausage system with an installed cost of $440,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at
Project Evaluation Your firm is contemplating the purchase of a new $840,000 computer- based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will
Project Evaluation in the previous problem, suppose your required return on the project is 20 percent and your pretax cost savings are $380,000 per year. Will you accept the project? What if the
Calculating EAC A five-year project has an initial fixed asset investment of $240,000, an initial NWC investment of $20000, and an annual OCF of —$32,000. The fixed asset is fully depreciated over
Calculating EAC you are evaluating two different silicon wafer milling machines. The Techron I costs $330,000, has a three-year life, and has pretax operating costs of $41,000 per year. The Techron
Calculating a Bid Price Heer Enterprises heeds someone to supply it with 160.000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided
Cost-Cutting Proposals Chatman Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $530,000 is estimated to result in $205,000 in
Comparing Mutually Exclusive Projects Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs $380,000, has a four- year life, and
Comparing Mutually Exclusive Projects suppose in the previous problem that EISC always needs a conveyor belt system: when one wears out, it must be replaced. Which project should the firm choose now?
Calculating a Bid Price Consider a project to supply 100 million postage stamps per year to the U.s. Postal Service for the next five years, you have an idle parcel of land available that cost
Interpreting a Bid Price In the previous problem, suppose you were going to use a three-year MACRS depreciation schedule for your manufacturing equipment, and you could keep working capital
Comparing Mutually Exclusive Projects Vanda lay Industries is considering the purchase of a new machine for the production of latex. Machine a costs $2,600,000 and will last for six years. Variable
Calculating Project NPV you have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for, zithers is growing quickly. The company bought
Project Evaluation Aguilera Acoustics (AAI), Inc. projects unit sales for a new seven-octave voice emulation implant as follows: Production of the implants will require $1,500,000 in net working
Calculating Required Savings a proposed cost-saving device has an installed cost of $540,000. The device will be used in a five-year project but is classified as three-year MACRS’ property for tax
Financial Break-Even Analysis to solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price
Calculating a Bid Price Your company has been approached to bid on a contract to sell 15,000 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond
Replacement Decisions Suppose we are thinking about replacing an old computer with a new one. The old one cost us $360,000; the new one will cost $730,000. The new machine will be depreciated
Forecasting Risk what is forecasting risk? In general would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why?
Sensitivity Analysis and Scenario Analysis What is the essential difference between sensitivity analysis and scenario analysis?
Marginal Cash flows A coworker claims that looking at all this marginal this and incremental that is just a bunch of nonsense, saying, “Listen, if our average revenue doesn’t exceed our average
Operating Leverage At one time at least, many Japanese companies had a “no-layoff’ policy (for that matter, so did IBM). What are the implications of such a policy for the degree of operating
Operating Leverage Airlines offer an example of an industry in which the degree of operating leverage is fairly high. Why?
Break-Even As a shareholder of a firm that is contemplating a new project, would you he more concerned with the accounting break-even point, the cash break-even point, or the financial break-even
Break-Even Assume a firm is considering a new project that requires an initial investment and has equal sales and costs over its life. Will the project reach the accounting, cash, or financial
Capital Rationing how are soft rationing and hard rationing different? What are the implications if a firm is experiencing soft rationing? Hard rationing?
Capital Rationing Going all the way back to Chapter, recall that we saw that partnerships and proprietorships can face difficulties when it comes to raising capital. In the context of this chapter,
Calculating Costs and Break-Even Night Shades inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $4.68 per unit, and the. Variable labor cost is $2.27 per unit.a. What is the
Computing Average Cost Everest Ever wear Corporation can manufacture mountain climbing shoes for $17.82 per pair in variable raw material Costs and $12.05 per pair in variable labor expense. The
Scenario Analysis Rollo Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,600 per unit; variable costs = $180 per unit; fixed costs = $5.5 million;
Sensitivity Analysis For the company in the previous problem, suppose management is most concerned about the impact of its price estimate on the project’s profitability. How could you address this
Sensitivity Analysis and Break-Even We are evaluating a project that costs $936,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life
Scenario Analysis ‘In the previous problem, suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and
Calculating Break-Even in each of the following cases, calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even.
Calculating Break-Even In each of the following cases, find the unknown variable:
Calculating Break-Even A project has the following estimated data: price = $68 per unit; variable costs = $41 per unit; fixed costs = $8,000; required return = 15 percent; initial investment =
Using Break-Even Analysis Consider a project with the following data: accounting break-even quantity = 17,000 units; cash break-even quantity = 12,000 units; life = five years; fixed costs =$J
Calculating Operating Leverage At an output level of 55,000 units, you calculate that the degree of operating leverage is 3.25. If output rises to 64,000 units, what will the percentage change in
Leverage In the previous problem, suppose fixed costs are $150,000. What is the operating cash flow at 48,000 units the degree of operating leverage?
Operating Cash Flow and Leverage A proposed project has fixed costs of $43,000 per year. The operating cash flow at 8,000 units is $79,000. Ignoring the effect of taxes, what is the degree of
Cash Flow and Leverage At an output level of 10,000 units, you have calculated that the degree of operating leverage is 2.15. The operating cash flow is $28,000 in this case. Ignoring the effect of
Leverage In the previous problem, what will be the new degree of operating leverage in each case?At an output level of 10,000 units, you have calculated that the degree of operating leverage is 2.15.
Break-Even Intuition consider a project with a required return of R% that costs $1 and will last for N years. The project uses straight-line depreciation to zero over the N-year life; there is no
Sensitivity Analysis Consider a four-year project with the following information: initial fixed asset investment = $460,000; straight-line depreciation to zero over the four-year life; zero salvage
Operating Leverage In the previous problem, what is the degree of operating leverage at the given level of output? What is the degree of operating leverage at the accounting break-even level of
Project Analysis you are considering a new product launch. The project will cost $1,400,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are
Project Analysis McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $700 per set and have a variable cost of $320 per set. The company has spent $150,000 for a
Scenario Analysis In the previous problem, you feel that the values are accurate to within only ± 10 percent. What are the best-case and worst-case NPVs?
Sensitivity Analysis McGilla Golf would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. What is the sensitivity of the NPV to each of
Break-Even Analysis Hybrid cars are touted as a “green” alternative; however, the financial aspects of hybrid ownership are not as clear. Consider the 2006 Honda Accord Hybrid, which had a list
Break-Even Analysis In an effort to capture the large jet market, Airbus invested $13 billion developing its A380, which is capable of carrying 800 passengers. The plane has a list price of $280
Break-Even and Taxes This problem concerns the effect of taxes on the various break-even measures.a. Show that, when we consider taxes, the general relationship between operating cash flow, OCF, and
Operating Leverage and Taxes shown that if we consider the effect of taxes, the degree of operating leverage can be written as: DOL = 1 + [FC x (1 – T) – T x D] / OCF. Notice that this reduces to
Sensitivity analysis in problem 27, suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw requirement. What is the sensitivity of
Break-Even Analysis use the results of problem 25 to find the accounting, cash, and financial break-even quantities for the company in problem.
Operating Leverage Use the results of problem 26 to find the degree of operating leverage for the company in problem 27 at the base-case output level of 45,000 units how does this number compare to
Investment Selection Given that ViroPharma was up by over 469 percent for 2005, why didn’t all investors hold?
Investment Selection Given that Majesco Entertainment was down by almost 92 percent for 2005, why did some investors hold the stock? Why didn’t they sell out before the price declined so sharply?
Risk and Return We have seen that over long periods, stock investments have tended to substantially outperform bond investments. However, it is common to observe investors with long horizons holding
Market Efficiency Implications Explain why a characteristic of an efficient market is that investments in that market have zero NPVs.
Abandonment Decision for some projects, it may be advantageous to terminate the project early. For example, if a project is losing money, you might be able to reduce your losses by scrapping out the
Semi strong Efficiency If a market is semi strong form efficient, is it also weak form efficient? Explain.
Efficient Markets Hypothesis what are the implications of the efficient markets hypothesis for investors who buy and sell stocks in an attempt to ‘beat the market”?
Stocks versus Gambling Critically evaluate the following statement: Playing the stock market is like gambling. Such speculative investing has no social value other than the pleasure people get from
Efficient Markets Hypothesis Several celebrated investors an4 stock pickers frequently mentioned in the financial press have recorded huge returns on their investments over the past two decades. Is
Efficient Markets Hypothesis For each of the following scenarios, discuss whether profit opportunities exist from trading in the stock of the firm under the conditions that (1) the market is not weak
Calculating Returns Suppose a stock had initial price of $84 per share, paid a dividend of $2.05 per share du’4ng the year, and had an ending share price of $97. Compute the percentage total return.
Calculating yields in Problem 1, what was the dividend yield? The capital gains yield?
Return Calculations Rework Problems 1 and 2 assuming the ending share price is $79.
Calculating Returns Suppose you bought a 6 percent coupon bond one year ago for $940. The bond sells for $920 today.a. Assuming a $1,000 face value, what was your total dollar return on this
Nominal versus Real Returns what was the average annual return on large-company stock from1926 through 2005:a. In nominal terms?b In real terms?
Bond Returns What is the historical real return on long-term government bonds on long-term corporate bonds?
Calculating Returns and Variability Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y.
Calculating Returns and Variability You’ve observed the following returns on Crash-n-Burn Computer s stock over the past five years: 2 percent, —8 percent, 24 percent, 19 percent, and 12
Calculating Real Returns and Risk Premiums for Problem 9, suppose the average inflation rate over this period was 3.5 percent and the average T-bill rate over the period was 4.2 percent.a. What was
Calculating Real Rates given the information in Problem 10, what was the average real risk-free rate over this time period? What was the average real risk premium?
Calculating Investment Returns You bought one of Great White Shark Repellant Co.’s 7 percent coupon bonds one year ago for $920. These bonds make annual payments and mature six years from now.
Calculating Returns and Variability You find a certain stock that had returns of 13 percent, —9 percent, —15 percent, and 41 percent for four of the last five years. If the average return of the
Arithmetic and Geometric Returns a stock has had returns of 18 percent, 4 percent, 39 percent, —5 percent, 26 percent, and —11 percent over the last six years. What are the arithmetic and
Arithmetic and Geometric Returns A stock has had the following year-end prices and dividends: What are the arithmetic and geometric returns for the stock?
Using Return Distributions suppose the returns on long-term corporate bonds are normally distributed. Based on the historical record, what is the approximate probability that your return on these
Using Return Distributions assuming that the returns from holding small company stocks are normally distributed, what is the approximate probability that your money will double in value in a single
Distributions in Problem 18, what is the probability that the return is less than—100 percent (think)? What arc the implications for the distribution of returns?
Blume’s Formula Over a 30-year period an asset had an arithmetic return of 12.8 percent and a geometric return of 10.7 percent. Using Blume’s formula, what is your best estimate of the future
Blume’s Formula Assume that the historical return on large-company stocks is a predictor of the future returns. What return would you estimate for large-company stocks over the next year? The next
Using Probability Distributions Suppose the returns on large-company stocks are normally distributed. Based on the historical record, use the cumulative normal probability table (rounded to the
Using Probability Distributions Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the historical record, use the cumulative normal probability table
Diversifiable and Non diversifiable Risks In broad terms, why is some risk diversifiable? Why are some risks non diversifiable? Does it follow that an investor can control the level of unsystematic
Information and Market Returns Suppose the government announces that, based on a just- completed —survey, the growth rate in the economy is likely to be 2 percent in the coming year, as
Systematic versus Unsystematic Risk Classify the following events as mostly systematic or mostly unsystematic. Is the distinction clear in every case?a. Short-term interest rates increase
Systematic versus Unsystematic Risk Indicate whether the following events might cause stocks in general to change price, and whether they might cause Big Widget Corp.’s stock to change price:a. The
Expected Portfolio Returns If a portfolio has a positive investment in every asset; can the expected return on the portfolio be greater than that on every asset in the portfolio? Can it be less than
Diversification True or false: The most important characteristic in determining the expected return of a well-diversified portfolio is the variance of the individual assets in the portfolio. Explain.

Showing 400 - 500 of 32365

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Secure Payment

Download Our App

© 2024 SolutionInn. All Rights Reserved