You are asked to evaluating two manually exclusive projects x and y. the cash flow for each is listed below along with the calculated npv and irr. the firm's cost of capital is 12%.

1. Calculate the NPV of each project. Which project would you accept based on NPV criterion and why?
2. What Is the IRR of each project?
3. Would you accept/reject decision change for the projects X and Y if the cost of capital increased to 18%?

A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $747.72. The company's federal-plus-state tax rate is 40%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places.

Ratios are mostly calculated based on the financial statements of a firm. However, another group of ratios, called market-based ratios, relate to a firm’s observable market value, stock prices, and book values, integrating information from both the market and the firm’s financial statements.

Consider the case of Blue Dog Manufacturing Corp.:

Blue Dog Manufacturing Corp. just reported a net income of $12,000,000, and its current stock price is $23.00 per share. Blue Dog is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,900,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,400,000 shares).

If Blue Dog’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? (Hint: If you choose to compute the firm’s price/earnings ratio, round its value to four decimal places.)

a) $21.42 per share

b) $23.00 per share

c) $16.07 per share

d) $26.78 per share

.One year later, Blue Dog Manufacturing Corp.’s stock is trading at $39.75, and the company reports its common equity value as $31,701,600. What is Blue Dog Manufacturing Corp.’s market-to-book(M/B) ratio? (1.07x/22.27x/13.93x/9.29x) choose one

Can a company’s stock have a negative P/E ratio? yes/no (choose one)

Given the information for Callye,Inc., prepare a statement of cash flows (in thousands)

Increase in accounts receivable: $13 Dividends: $5

Increase in inventories: 25 Change in common stock: 0

Net income: 33 Increase in gross fixed assets: 55

Beginning cash: 15 Depreciation expense: 7

Increase in accounts payable: 20

Increase in accrued expenses: 5

Increase in long-term notes payable: 28

Under what circumstances will the IRR and NPV rules lead to the same decision (accept/reject)? When might they conflict? (It is important to explain your answers with details or demonstrate your understanding by applying examples.) please this answer should not be from text book.

NPV

Your division is considering two projects with the following cash flows (in millions):

1. What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
   Project A    $   million
   Project B    $   million

   What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
   Project A    $   million
   Project B    $   million

   What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
   Project A    $   million
   Project B    $   million

2. What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places.
   Project A   %
   Project B   %

   What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places.
   Project A   %
   Project B   %

   What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places.
   Project A   %
   Project B   %

6.  Problem 11.06 (NPV)

1. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are:

The correlation between the fund returns is 0.15.

What is the Sharpe ratio of the best feasible CAL?

Sharpe ratio=

2. The standard deviation of the market-index portfolio is 10%. Stock A has a beta of 2.50 and a residual standard deviation of 20%.


a. Calculate the total variance for an increase of 0.10 in its beta. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

b. Calculate the total variance for an increase of 1.24% in its residual standard deviation. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

A store has 5 years remaining on its lease in a mall. Rent is $1,900 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a "great deal" (owner's words) on a new 5-year lease. The new lease calls for no rent for 9 months, then payments of $2,500 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 1% per month).

Should the new lease be accepted?

If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and old leases? (Hint: Find FV of the old lease's original cost at t = 9; then treat this as the PV of a 51-period annuity whose payments represent the rent during months 10 to 60.) Do not round intermediate calculations. Round your answer to the nearest cent.

The store owner is not sure of the 12% WACC—it could be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases? (Hint: Calculate the differences between the two payment streams; then find its IRR.) Do not round intermediate calculations. Round your answer to two decimal places.

On March 1, you borrow $239,000 to buy a house. The mortgage rate is 7.75%. The loan is to be repaid in equal monthly payments over 20 years. The first payment is due on April 1. How much of the third payment applies to the principal balance? (Assume that each month is equal to 1/12 of a summer).

how excess capacity impacts the planning process of financial forecasting.

Project L costs $35,000, its expected cash inflows are $10,000 per year for 8 years, and its WACC is 9%. What is the project's discounted payback? Do not round intermediate calculations. Round your answer to two decimal places.

  years:

Consider a corporation with a market value of $100 million. The form has a zero- coupon bond with an aggregate Face value of $100 million due in one year. The volatility of the rate of return on the firm is 30% per year and the risk-free rate is 5% per year. What is the aggregate market value of this bond?

A. 79.17 million

B. 69.25 million

C. 98.01 million

D. 85.77 million

E. None of the above