For capital budgeting purposes, which of these is considered a cash inflow?

A decrease in the cash balance

An increase in accounts receivable

An increase in inventory

A decrease in accounts payable

You decide to open a Blank Street Coffee style automated coffee truck downtown. Buying and outfitting the truck will cost $$47,000,$ eligible for bonus depreciation, and you will need $$2,000$ in working capital. After five years, the truck and equipment will have $$10,000$ of salvage value.

The lattes will be priced at an average of $$5$ and cost $$2$ to make.

You will have a $20\%$ tax rate and a small business loan at $8\%.$

Over a five year horizon, what is the break$-$even number of lattes that you will need to sell per year?

Your firm is considering launching a new product offering. To launch the project will cost $$0\mathrm{.}8$ million in upfront costs, eligible for $100\%$ bonus depreciation. Over the next three years you estimate you can sell $300$ each year, at a price of $$10,000$ in year $1,$ $$9,000$ in year $2,$ and $$6,000$ in year $3.$ The all in costs to produce the product are $$4,400$ per unit.

The fixed assets will have a salvage value of $$0\mathrm{.}4$ million in three years$$ time. If your firm's tax rate is $22\%,$ and cost of capital is $18\%,$ what is the project NPV$?$

You are evaluating a project that would require $$120,000$ of capital expenditure today. You estimate it will generate $$56,000$ per year in added revenues and $$30,000$ added costs per year, for the next five years.

The fixed assets will have $$20,000$ of salvage value and are eligible for $100\%$ bonus depreciation. You will need to hold additional inventory worth $$10,000$ while the project is running. Your firm's tax rate is $20\%.$ What is the project IRR?

You are valuing a small competitor firm for a possible acquisition. In year $1,$ the firm will generate $$30$ million in EBITDA, and will require $$5$ million in maintenance capex.

The firm's tax rate is $20\%$ and the maintenance capex is all depreciated in the same year it is spent.

All year $1$ values will grow at $2\%$ per year in perpetuity. The discount rate is $15\%.$

The firm is $100\%$ equity financed and has $4$ million shares outstanding. What is the fundamental value per share?

What is the fair value of a call option on the S&P$500$ index with the following inputs:

Strike price $=5300$

Index level $=5170$

Volatility $=24\%$

Treasury bill rate $=5\%$

Maturity $=1$ month

S&P Index: $5150$

$1$ month S&P Call option with a strike price @$5200$ is trading at $$115\mathrm{.}37$

Current $1$ month T$-$bill rate: $4\mathrm{.}1\%$

What is the implied volatility of the S&P $500?($meaning$,$ at what level is the VIX?$)$

ou have just been hired at a small AI software firm firm. Your pay package consists of:

$1)$ A $$120,000$ salary, and

$2)5,000$ four$-$year warrants with a strike price of $$50$ on the firm's stock.

The stock last traded at $$22\mathrm{.}10$ per share, has a volatility of $40\%,$ and the Treasury rate is $4\mathrm{.}4\%.$ What is the total value of your pay package?

If a firm's management decides to play it safe, so the volatility of future cash flows goes down, the value of the firm's shares will go $\_\_\_\_$ while the value of the firm's bonds will go $\_\_\_\_.$

You are considering introducing a new line of tests at your genetics firm. You previously did test$$marketing and surveys at a cost of $$12,000.$ Based on the results, you estimate that you could sell $2000$ of the new tests at a price of $$199.$

$500$ of those sales would be to customers who would have bought your old test, which costs $$299.$ The remaining tests would be sold to new customers. Both tests cost $$80$ per unit to produce, and your firm's tax rate is $20\%.$ What is the after$-$tax incremental revenue of introducing the new line of tests?

You are evaluating a project that would require $$120,000$ of capital expenditure today. You estimate it will generate $$56,000$ per year in added revenues and $$30,000$ added costs per year, for the next five years.

The fixed assets will have $$20,000$ of salvage value and are eligible for $100\%$ bonus depreciation. You will need to hold additional inventory worth $$10,000$ while the project is running. Your firm's tax rate is $20\%.$ What is the project IRR?

You are valuing a small competitor firm for a possible acquisition. In year $1,$ the firm will generate $$30$ million in EBITDA, and will require $$5$ million in maintenance capex.

The firm's tax rate is $20\%$ and the maintenance capex is all depreciated in the same year it is spent.

All year $1$ values will grow at $2\%$ per year in perpetuity. The discount rate is $15\%.$

The firm is $100\%$ equity financed and has $4$ million shares outstanding. What is the fundamental value per share?

On the golf course, your BFF from $6022$ lets it slip that her firm is going to be acquired. You deliberately slice your ball into the bushes, pull out your phone, and begin insider trading.

The firm's stock is trading at $$44$ and the T$-$bill rate is $3\mathrm{.}2\%.$ $$50$ call options that expire in one month are trading right now at a price of