Answers Homework 4

Answers Homework 4 - 15% Output area: NPV of going to...

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Chapter 8 Question 4 Input area: Machine cost $200,000 Life of machine 5 Price per unit $25 Variable cost per unit $5 Fixed costs $350,000 Tax rate 25% Discount rate 12% Output area: EAC $55,481.95 Financial breakeven 20,532.13
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Chapter 8 Question 8 Input area: Go to market now: Probability of success 55% Market research: Cost $1,000,000 Probability of success 70% NPV if successful $30,000,000 NVP if unsuccessful $3,000,000 Disocount rate
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Unformatted text preview: 15% Output area: NPV of going to market now $17,850,000.00 NPV of market research $18,043,478.26 The company should use the market research since this option has the highest NPV. Chapter 9 Question 10 Input area: Stock return 55.20% Average inflation 4.20% Average T-bill rate 5.10% Output area: a. Average real return 48.94% b. Average nominal risk premium 50.10%...
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Answers Homework 4 - 15% Output area: NPV of going to...

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