Suppose you retire at age 70, with a life expectancy of 20 more years, and you expect to spend $55,000 a year during your retirement. How much money do you need to save by age 70 to support this consumption plan? Assume an interest rate of 7%.
A firm that plans to expand its product line must decide whether to build a small or large facility to produce the new products. If it builds a small facility and demand is low, the net present value after deducting for building costs will be $400,000. If demand is high, the firm can either maintain the small facility or expand
Q1.A Company has decided to redeem its preference shares at a premium of $ 0.25. The preference shares were originally issued at $ 1.15 each. Prior to the redemption the company's Balance Sheet showed the following $000
1. A company has a debt ratio greater than the industry average. How would an investor evaluate the implications of this higher debt ratio in making an investment decision in this company's common stock? 2. In your opinion, what are the major factors determining the kind of financing for working capital a company can secure?
Chloe Schwasher, the vp of Finance for a major appliance manufacture, has before her 8 investment proposals submitted by various segments of the company for her approval or rejection. the table below summarizes each proposal's net present value (NPV)& capital requirements for the next 5 years. because of the limited cash availab
1. Why would a manager use the Weighted Cost of Capital for investment decisions when a specific project may be funded by a particular source of capital, (e.g. debt or equity)? 2. What capital budgeting process and evaluation does your organization (or one you can talk to) use? Specifically what Pay Back Period and NPV di
Pappy's Potato has come pu with a new product, the Pet Potato (they are freeze-dried to last longer). Pappy's paid $120,000 for a marketing survey to determine the viability of the product. It is felt that Pet Potato will generate sales of $270,000 per year. The fixed costs associated with this will be $115,000 per year, and
Bedknobs and Broomsticks, Inc., has the following two projects available. The required return is 14% PLEASE SEE ATTACHED SPREADSHEET a) What is the IRR for each project? b) What is the NPV for each project? c) Which, if either, of these two projects should the company choose?
B.C. Rogers, Inc., is presented with the following two mutually exclusive projects. The required return is 15%. PLEASE SEE ATTACHED SPREADSHEET FOR FIGURES. a) What is the profitability index for each project? b) What is the NPV for each project? c) Which, if either, of the projects should the company choose? 8-25
Consider the following two mutually exclusive projects: (Please see attached spreadsheet for info.) Whichever project you choose, if any, you require a 15% return on your investment. a) If you apply the payback criterion, which investment will you choose? Why? b) If you apply the NPV criterion, which investment will y