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# Answers Homework 5a - Disocount rate 15 Output area NPV of...

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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
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Unformatted text preview: Disocount rate 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 retu 55.20% Average i 4.20% Average T 5.10% Output area: a. Average real return 48.94% b. Average nominal risk premiu 50.10%...
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