Please answer soon! Will upvote!
1. A firm has a project X with cash flows of $-12,000, $5,000, $6.000, $2000, $800 in periods 0 to 4 respectively. (a) Calculate its payback period (b) Explain how you would decide whether or not to accept this project if there is another project Y with a payback period of 4 years 2. Explain how many IRRs a project can have if its cash flows are -S4 in period 0, $20 in period 1, -97 in period 2. -$20 in period 3. -$4 in period 4, S15 in period 5 and WHY. 3. A project has a profitability index of 0.72. (a) Explain whether this project should be accepted or not, if it is the only project being considered and WHY. (b) What are some of the limitations of using this profitability index approach compared to using other approaches such as the NPV? ANSWER ANY ONE OF 4a or 4 b: 4a Clearly and completely discuss at least three reasons why a firm may NOT accept a project whose IRR is greater than the project's required return. OR 4b. Discuss ALL the limitations of the payback approach clearly and completely, including how managers can use the method to benefit themselves at the expense of the stockholders. ANSWER ANY ONE OF 5a or 5b: 5a. The Aragon Corp. operates in the risky oil industry, and is trying to decide on whether it should raise capital long-term using debt or equity. If it uses equity, it would do so by selling new stock. Much of the stock is family owned, and the owners exercise tight control over the firm's cash and spending. The firm currently has an A bond rating, a times interest earned ratio of 2.2 on its current long-term raise capital long-term using debt or equity. If it uses equity, it would do so by selling new stock. Much of the stock is family owned, and the owners exercise tight control over the firm's cash and spending. The firm currently has an A bond rating, a times interest earned ratio of 2.2 on its current long-term debt and has a lot of old equipment that will need to be replaced in a few years. The firm has historically been very profitable on average and is in a high tax bracket. Explain clearly and completely how at least three of the factors above should influence Aragon's choice of debt versus equity in raising capital OR 5b. A firm is considering opening a new branch with sales of 100,000 units annually at 580 per unit for years 1 to2 and then 90 per unit after year 2. Its variable costs are 32 percent of sales and fixed annual costs (excluding depreciation) are $900,000. The firm will need new equipment that cost $6 million in year 0 of the project and is being depreciated straight-line over a 10 year life to a salvage value of $1.5 million. The firm's tax rate is 32 percent and the firm needs to borrow the $6 million for the new equipment at 8 percent per year, (a) Given this information, calculate the expected net cash flow for YEAR 4 ONLY of this project. SHOW ALL WORK, STEPS, FOMULAE! (b) Explain what changes you would make in the calculation of this expected ner cash flow if the new branch is expected to reduce sales at an existing branch in a neighboring town by $200,000 annually 6. (a) Discuss in detail 2-3 skills you believe that you have developed in this course. (b) Discuss in detail 2-3 topics that you feel most confident that you have mastered in this course. (c) Discuss in detail 2-3 topics or assignments, etc... that you had the most difficulty with and explain why. (d) Discuss in detail 2-3 recommendations you may have for improving online delivery and interaction for this course. Please EXPLAIN all answers, do not just list points
