For this question, assume that your change in net working capital from the initial investment in inventory is 5 million (although this is not what you calculated in question 3). How much will you spend for the project’s initial cash flow (ICF)?

As an alternative, you could purchase “Model B” that costs $500,000, and will be depreciated using four-year, straight-line depreciation.  You will have no maintenance cost, and the equipment will be sold for $100,000 at the end of three years.  If your effective tax rate is 20%, what is the effective cost of this machine?  Your WACC is 10% on equipment purchases.  

As an alternative, you could purchase “Model B” that costs $500,000, and will be depreciated using four-year, straight-line depreciation.  You will have no maintenance cost, and the equipment will be sold for $100,000 at the end of three years.  If your effective tax rate is 20%, what is the equivalent annual payment for this machine?  Your WACC is 10% on equipment purchases.

Assume the following are the correct cash flows for the project, and your cost of capital is 8%, what is the NPV for the project?  These are not the actual values for this problem.  Do not use the ones you calculated in earlier problems.             ICF = -26             OCF[1] = 8             OCF[2] = 10             OCF[3] = 13             OCF[4] = 9             TCF = 6

When you subtract the initial cost from the present value of an investment’s cash flows, you get the:

Which date is enforced by the stock exchanges as the last day you can purchase the stock and receive an announced dividend, in order to give them time to inform the company of the change in share ownership?

You are considering the purchase of a semi-annual bond that will mature in eight years.  It has a coupon rate of 6%, and a face value of 1,000.  If you wish to earn 7% on the bond, what is the price you would be willing to pay for it?

If you borrowed $800,000 and used that debt to buy back stock at the current price, what would be your new net income?   

What type of ownership will not reduce agency problems between shareholders and managers of a firm?

Solve: x+6x-2=3xx-2{“version”:”1.1″,”math”:”x+6x-2=3xx-2″}