Question
A 3-year project will cost $60,000 to construct. This will be depreciated straight-line to zero over the 3- year life. Projected sales = 7,000 units
A 3-year project will cost $60,000 to construct. This will be depreciated straight-line to zero over the 3- year life. Projected sales = 7,000 units per year, price per unit = $25 and variable cost per unit = $14. Fixed costs = $30,000 per year. The tax rate = 30% and the debt-to-equity ratio is 1. The firm has outstanding 8% annual coupon bonds with 9 years until maturity selling at 109:0. The firm just paid a $2.00 dividend on its common stock, the dividend growth rate is 5% and the stock currently sells for $28 per share. 30.
What is the operating cash flow in year 2?
IRR?
Required rate of return on firm's common stock?
YTM on company's bonds?
NPV? (assume 9.57% discount rate)
discount pay-back period?
please show steps and formulas, im using a ba ii plus financial calculator
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