Chapter 10 - ManagerialFinance Chapter10 1 Exercises and...

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Managerial Finance Chapter 10   1 Exercises and Problems 1. What is the payback if investment cost is $45,000 and the after-tax benefit is $2,000?
3. Joe Morton buys a piece of equipment for $200,000. He puts down $40,000 and finances $160,000. Joe’s opportunity cost is 4 percent, and the lender’s interest rate is 8 percent. Find the weighted average cost of capital (WACC). 5. If the 10 percent present value ordinary annuity factor (PVAF) is 8.5136 and
the 11 percent, PVAF is 7.9633, a PVAF of 8.1234 correlates to an internal rate of return (IRR) of ________?
7. Kay Sadilla is considering investing in a franchise that requires an initial outlay of $75,000. She conducted market research and found that after-tax cash flows on the investment should be about $15,000 per year for the next 7 years. The franchiser

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