Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $720,000 is estimated to result in $240,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $105,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $4,500 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 35 percent and its discount rate is 16 percent, what is the NPV for this project? (Do not round your intermediate calculations.) rev: 09_18_2012 $-106,139.92 $-103,318.84 $-170,365.41 $-111,446.91 $-100,832.92

The expected pretax return on three stocks is divided between dividends and capital gains in the following way:

a. If each stock is priced at $190, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains?

b. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity.

If each stock is priced at $190, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Mike and Mary Jane Lee have a yearly income of ​$77,389 and own a house worth ​$98, 600​, two cars worth a total of $ 19,025 and furniture worth ​$7,963. The house has a mortgage of ​$59,193 and the cars have outstanding loans of ​$2,216 each. Utility​ bills, totaling ​$147 for this​ month, have not been paid. Calculate or use Worksheet 4 to determine their net worth and explain what it means. How would the​ Lees' age affect your assessment of their net​ worth? The value of Mike and Mary​ Jane's total assets are ​$ nothing. ​(Round to the nearest​ dollar.)

Steve Sullivan was recently promoted to loan officer at the first national bank. He has authority to issue loans up to $50,000 without approval from a higher bank official. this week two small companies, Handy Harvey, Inc. and Sheila’s fashion, Inc, have each submitted a proposal for a six-month $50,000 loan. In order to prepare a financial analysis of the two companies Steve has obtained the information summarized below.

Handy Harvey, Inc. is a local lumber and home improvement company. Because sales have increased so much during the past two years, Handy Harvey has had to raise additional working capital , especially as represented by receivables and inventory. The $50,000 loan is needed to assure the company of enough working capital for next year. Handy Harvey began the year with total assets of $740,000 and stockholders equity of $260,000 and during the past year the company had a net income of $40,000 on sales of $760,000. The company’s current unclassified balance sheet appears as follows:

Sheila’s Fashions, Inc. has for three years been a successful clothing store for young professional women. The leased store is located in the downtown financial district. Sheila’s loan proposal ask for $50,000 to pay for stocking a new line professional suilts for working women during the coming season. At the beginning of the year, the company had total assets of $200,000 and total stockholders’ equity of $114,000. Over the past year, the company earned a income of $36,000 on sales of $480,000. The firm’s unclassified balance sheet the current date appears as follows

Required

1. Prepare a financial analysis of both companies’ liquidity and after receiving the proposed loan. Also, compute profitability ratios before and after as appropriate. Write a brief summary of the effect if the proposed loan on each company’s financial position.
2. To which company do you suppose Steve would be most willing to make a $50,000 loan? What are the positive and negative factors related to each company’s ability to pay back the loan in the next year? What other information of a financial or non-financial nature would be helpful before making a financial decision?

The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike except that they are located in different towns. The end-of-period value of each firm is determined by the weather, as shown below. There will be no synergy to the merger.

The weather conditions in each town are independent of those in the other. Furthermore, each company has an outstanding debt claim of $580,000. Assume that no premiums are paid in the merger.

a. What are the possible values of the combined company? (Do not round intermediate calculations.)

b. What are the possible values of end-of-period debt and stock after the merger? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)

c. How much do stockholders and bondholders each gain or lose if the merger is undertaken? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.)

3.

A. What techniques can a firm use to optimize demand deposit holdings?

B. How do a firm’s current asset investment policies impact the firm’s ROE? (For example: how would a restricted investment policy affect ROE, versus a relaxed policy?)

Kilgore Natural Gas has $1,000 par value bonds outstanding at 12% interest. The bonds will mature in 50 years. Compute the current price of the bonds if the yields to maturity (YTM) is 14 percent. Assume annual coupon payments.

1. How to company's value a foreign project?

2. What is the difference between Project and Parent valuation?

3. Shall we use discounted cash flow valuation or real options analysis?

Suppose you purchase 900 shares of stock at $74 per share with an initial cash investment of $33,300. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Ignore dividends.

a. Calculate your return on investment one year later if the share price is $82. Suppose instead you had simply purchased $33,300 of stock with no margin. What would your rate of return have been now? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

b. Calculate your return on investment one year later if the share price is $74. Suppose instead you had simply purchased $33,300 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

c. Calculate your return on investment one year later if the share price is $58. Suppose instead you had simply purchased $33,300 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

how do we value a stock and decide if it is reflective of the actual price we are going to pay for the stock? is there any benchmarks that help measure the risk and associate a return?

answer please

The Startracks corporation is considering the purchase of new equipment to replace some old, existing equipment. The old equipment is fully depreciated and has a current market value of $1.2M. The new equipment costs $10.4M and will be depreciated using the 5 year MACRS class. The equipment is used to produce items with constant annual revenues of $18M. Current costs (using the old equipment) are $3M per year. The new equipment will not change the expected revenues (they will remain at $18M per year), but will allow the company to cut costs by $1M per year. The project is expected to last for 4 years, at which time the new equipment would be worth $6.0M. If the old equipment is kept, it will be worthless in 4 years. The company's marginal tax rate is 35%. The company is financed with $50M of preferred stock and $150M of common stock. The preferred stock has a current value of $20 and pays constant dividends of $2 annually. The expected return on the common stock is 14.4%. Should the project be accepted?

Consider a 10 year bond which pays 6% coupon annually and has a yield-to-maturity of 7%. How much would the price of bond change if investors required return increases to 8% per year?

Explain at least one practical value of classifying an organization's total costs into direct and indirect costs.

I plan on retiring at 70 years of age, I want to retire with a net income of $105,000 a year, total. I anticipate that social security will fund $20,000 of this total, but the social security will be taxable at 25%. The other portion is a ROTH IRA and not taxable at retirement.

How much will I need to have earned to fund this retirement at age 70 if I believe that I can retire for 30 years, to age 100, (no money left at 100, so it will be an annuity type investment, not perpetuity). I plan on earning 3.9% on my nest egg, or retirement savings for those 30 years. (lump sum). Round to the nearest dollar.

Is there a risk of negatively impacting the revenue for the company by creating tighter credit standards? Why or why not?