"Please disregard my questions (do not answer, I figure it out myself). Thanks."
1. Sue Pansky, a retired grade-school teacher, is considering investing in Starting Right. She is very conservative and is a risk avoider. What do you recommend?
The Landis Corporation had 2009 sales of $204 million. The balance sheet items that vary directly with sales and the profit margin are as follows: Percent Cash 6% Accounts receivable 11% Inventory 18% Net fixed assets 39%...
1. Seaborn Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of the these cash flows? What is the present value at 18 percent? At 24 percent? 2. Investment X offers to pay you $6,000 per year for nine years,...
You need a new CT scanner. The scanner can be leased under one of two options. Option A is a straight lease payment of $180,000 per year, payable one year in advance. Option B is a per-procedure lease basis. Under option B, you would pay $50,000 per year regardless of volume, payable one year in...
30) Which of the following is not a condition under which a prudent manager would accept some risk in financing?
Assuming a firm borrows money at 8 percent after taxes, pays 12 percent for equity, and raises its capital in equal proportions from debt and equity, what is its weighted average cost of capital?
Describe the ethical considerations of a financial manager selling collateralized debt obligations,such as sub-prime loans to elderly clients.
The ABC Corporation is considering a project which has an up-front cost paid today at t=0. The project will generate positive cash flows of $70,000 a year at the end of each of the next five years. The project's NPV is $90,000 and the company's WACC is 12 percent. What is the projects...
Using the Discounted Cash Flow Model (DCF), calculate the value including the stock price of ABC Incorporated given the following assumptions: Revenue Growth - 60%, 40% and 35% per year; Pre-tax Earnings - 15%/year; Est. Tax Rates 38%; Long-term growth rate - 8%; S&P 500 Return - 10%;...
Ask a new Finance Question
Tips for asking Questions
- Provide any and all relevant background materials. Attach files if necessary to ensure your tutor has all necessary information to answer your question as completely as possible
- Set a compelling price: While our Tutors are eager to answer your questions, giving them a compelling price incentive speeds up the process by avoiding any unnecessary price negotiations
1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10