Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $175,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $112,000, variable costs of $29,500, and fixed costs of $12,350. The project will also require net working capital of $2,950 that will be returned at the end of the project. The company has a tax rate of 21 percent and the project’s required return is 12 percent. What is the net present value of this project?

All else held constant, a decrease in ________ will increase the cash cycle.

All else held constant, the operating cycle will increase when the:

A project that has a payback period exactly equal to the project’s life is operating at:

A 6-year project is expected to generate annual sales of 9,700 units at a price of $84 per unit and a variable cost of $55 per unit. The equipment necessary for the project will cost $381,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $230,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?

Rossdale Company stock currently sells for $69.13 per share and has a beta of .89. The market risk premium is 7.20 percent and the risk-free rate is 2.93 percent annually. The company just paid a dividend of $3.61 per share, which it has pledged to increase at an annual rate of 3.30 percent indefinitely. What is your best estimate of the company’s cost of equity?

Kountry Kitchenhas a cost of equity of 11.3 percent, a pretax cost of debt of 5.9 percent, and the tax rate is 21 percent. If the company’s WACC is8.80 percent, what is its debt-equity ratio?

You have $14,800 to invest and would like to create a portfolio with an expected return of 10.05 percent. You can invest in Stock K with an expected return of 8.65 percent and Stock L with an expected return of 12.3 percent. How much will you invest in Stock K?

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $352,000 and expenses by $244,000. The project will require $153,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 9-year life of the project. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield?

Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 7,400 pairs of sunglasses at a price of $169 each and a variable cost of $121 each. The equipment necessary for the project will cost $385,000 and will be depreciated on a straight-line basis over the 7-year life of the project. Fixed costs are $350,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses?