Over the past 12 years, the common stock of The Flower Shoppe has produced an arithmetic average return of 12.6 percent and a geometric average return of 12.3 percent. What is the projected return on this stock for the next five years according to Blume’s formula?

Revolution Bikes has credit sales of $822,400, costs of goods sold of $396,700, average accounts receivable of $43,200, and average accounts payable of $78,500. On average, how long does it take the credit customers of Revolution Bikes to pay for their purchases?

Consider a project with an initial asset cost of $168,000. The asset will be depreciated to zero over seven years using straight-line depreciation. Ignore bonus depreciation. At the end of the project’s four-year life the asset can be sold for $65,000. Given a combined federal and state tax rate of 24 percent, what is the aftertax salvage value of the asset?

An investment project provides cash flows of $7,000 per year for 10 years. If the initial cost is $20,000, what is the payback period?

Currently, Rangel Accessories sells 42,600 handbags annually at an average price of $149 each. It is considering adding a lower-priced line of handbags that sell for $79 each. The firm estimates it can sell 21,000 of the lower-priced handbags but expects to sell 7,200 fewer of the higher-priced handbags by doing so. What is the amount of annual sales that should be used when evaluating the addition of the lower-priced handbags?

The Taco Truck has projected next year’s quarterly sales at $960, $890, $980, and $1,050 for Quarters 1 to 4, respectively. Accounts receivable at the beginning of the year are $212 and the collection period is 18 days. What is the amount of the accounts receivable balance at the end of Quarter 2? Assume a year has 360 days.

A project has an accounting break-even point of 7,264 units. The fixed costs are $164,800 and the projected variable cost per unit is $24.57. The project will require $398,000 for fixed assets which will be depreciated straight-line to zero over the project’s four-year life. What is the projected sales price per unit?

ParkCrest, Incorporated, is considering a new 10-year expansion project with an initial fixed asset investment of $132,900. The fixed asset will be depreciated straight-line to zero over its 10-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $99,000 in annual sales, with costs of $34,300. The tax rate is 22 percent and the required return is 14.8 percent. What is the net present value of this project?

Consider the following information on three stocks: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .15 .27 .15 .11 Normal .65 .14 .11 .09 Bust .20 −.19 −.06 .05 A portfolio is invested 45 percent each in Stock A and Stock B, and 10 percent in Stock C. The expected T-bill rate is 3.2 percent. What is the expected risk premium on the portfolio?

You purchased 360 shares of stock at a price of $40.32 per share. Over the last year, you have received total dividend income of $405. What is the dividend yield?