Watson Leisure Time Sporting Goods has improved operations over time and the company needs to make a decision related to an equipment decision. The company plans to purchase a new piece of equipment (to be used over a six-year period) for $320,000. Assume the cash flows and depreciation (based upon the use of the 5-year MAC
You are given the following information for the equations for investment demand, private saving, the government's budget deficit, and natural real GDP: Id=2400-125r, S=1760+75r, T-G=-360, and Yn=12000. Suppose that this is a closed economy. the equilibrium interest rate is the one at which national saving and investment demand a
Need an explanation and example of the impact of the real gross domestic product (GDP) on the airline industry.
A company is considering an expansion project. Necessary equipment could be purchased for $9Million and the project would also require an intial $3Million investment in net operating working capital. the company's tax rate is 40%. What is the projects initial investment outlay?
You are considering making a movie. The movie is expected to cost $10 million upfront and take a year to make. After that, it is expected to make $5 million in the year it is released and $2 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will
The following set of costs and benefits is given for a 5 - year period for a Malibu Beach Coral Mining. Year 0 1 2 3 4 5 Cost (1000 of $) 3000 Cost of coastal erosion 200 200 200 200 200 200 Benefits Reve
You have been retained to evaluate a major investment for a technology company. The cost of the project is $100 million. If the project is successful, it will generate expected profits of $15 million per year forever, which has a present value of $150 million. However, there is a 50% chance that the project will be a complete
XYZ Corporation wants to achieve a steady 7% growth rate. If it can achieve a 12% return on equity, what percentage of earnings must XYZ retain for investment purposes? Please explain process in solution.
The Pampa Oil Company operates oil and gas exploration throughout the panhandle of Texas. The firm recently was approached by a wildcatter named William "Wild Bill" Donavan with the prospect to develop what he thought was a sure thing. Wild Bill owned the lease and wanted to sell it to Pampa to meet some rather pressing gambli
I have three questions and I am not sure what equations to use to solve the problems. What equation do I use to determine how much labor the firm should employ? A firm's demand curve and its total product of labor are detailed in the charts below. The firm's demand curve for its product is as follows:
Calculate the values for government purchases (G), private domestic saving (S), and private domestic investment (I) from the following information (all variables are in billions of dollars). national income Y = 5,200 budget deficit BuD = 150 disposable income YD = 4,400 trade deficit TD = 110 consumption C = 4,100
A new Internet company anticipates that it will need $30 million in venture capital in order to obtain a $1 billion terminal value in seven years. 1. Assuming that this company is a seed-stage company with no prior investors, what annualized return are investors anticipating? 2. Next, assume that the founder wants a venture ca
MTV is considering the purchase of a new network system. The network is call MTV2 and is expected to reduce the amount of time that the technicians spend installing software applications. MTV currently spends 7000 hours a month on installations, which cost MTV $20 per hour. The owners of MTV2 claim that their network can redu
PART 1 A local pet store, PET STORE, which has concentrated in selling puppies, is considering adding a line of pet food. A contractor estimates that it will cost $10,000 to convert some storage space into a retail area for the food. PET STORE will purchase the specialty food for $15 and sell it for $30. Marketing research
6. What would you pay today for a stock that is expected to make a $1.50 dividend in one year if the expected dividend growth rate is 3% and you require a 16% return on your investment? 7. A project costs $475 and has cash flows of $100 for the first three years and $75 in each of the project's last five years. What is the
Formulate the following situation as an extensive form game (using a game tree) and solve it using backward induction. Bingo Corporation and Canal Corporation are the only competitors in the electronic organizer industry. Bingo Corporation is considering an R&D investment to improve its product. Bingo can choose from three level
1. Your Uncle Joe has just died and left $10,000 payable to you when you turn 30 years old. You are now 20. Currently, the annual rate of interest on can obtain by buying 10-year bonds is 6.5 percent. Your brother offers you $6,000 cash right now to sign over your inheritance. Should you do it? No he should not do it be because
17-Computing Cost of Goods Manufactured Using the following information, compute cost of goods manufactured, which is the cost of inventory transferred to Finished Goods Inventory. Work-in-process inventory, beginning balance . . . . .. . . . . . . . . . . . . . . . .. . . . . . .. . . . . . $132,425 Work-in-process inven
1. Rappaport Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC: 10.00% Year:0 1 2 3 4 Cash flows:-$1,000 $400 $405 $410 $415
Why would a company forgo their debt financing and take on equity financing?
You are given the following data on two companies, M and N (figures are millions): M N Sales $1,080 $1,215 Net Income $54 $122 Investment $180 $405 Required: a.Which company has the higher profit margin? b.Which company has the higher inves
A company has the following investment opportunities for which the accompanying expected rate of return has been estimated. Project Expected Rate of Return A 12% B 9.5% C 8% D 5% If the cost of borrowing the money to finance investment is 6%, which of the p
A firm must spend $ 10 millions today in a project. That is expected to bring in annual revenues of $1.5 millions for the next 10 years (beginning at the end of year 1).The firm cost of capital is 5%, what is the NPV of this project?
Supposing an investor buys a stock for $40 per share and sells it for $45 after one year. At the end of that year, the dividend per stock is $1. The company has 100,000 shares outstanding and a total profit for the year of $800,000. What is the total return for the investor? What is the price-earnings ratio for this firm
Murdock Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. These estimates are shown in the following table. Project A Projec
You have been given the return data shown in the first table on three assets?F, G, and H?over the period 2007-2010. Expected return Year Asset F Asset G Asset H 2007 17% 18% 15% 2008 18 17 16 2009 19 16 17 2010 20 15 18 Using these assets, you have isolated the three investment alternativ
1.In payment for your engineering services a client offers you a choice between: (i) $10000 now, or (ii) a share in the project which you are certain you will be able to cash in for $16500 in five years. If you choose the $10,000 now it could be reinvested at an annual interest rate of i = 10%. Which is the most profitable c
Need help figuring this out. Please provide a DETAILED solution with calculations and formulas where needed. The answers should be pretty simple. Please use words in your explanation as well as formulas). Prepare a 5-10 minute oral presentation accompanied by 5-7 Microsoft Powerpoint slides illustrating the Capital Investmen
An investor is considering two alternative investments. The first alternative is to invest in an instrument that matures in two years. The second alternative is to invest in an instrument that matures in one year and at the end of one year, reinvest the proceeds in a one-year instrument. He believes that one-year interest rates
Please define the oversimplified multiplier and use your knowledge of the concept to answer the following question. Suppose that GDP is currently $25,000 and the marginal propensity to consume is .50. If autonomous investment increases by $5,000, what will GDP be in the new equilibrium? Assume the oversimplified multiplier is ac