McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $900 per set and have a variable cost of $435 per set. The company has spent $210,000 for a marketing study that determined the company will sell 81,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,650 sets per year of its high-priced clubs. The high-priced clubs sell at $1,330 and have variable costs of $650. The company will also increase sales of its cheap clubs by 10,900 sets per year. The cheap clubs sell for $344 and have variable costs of $144 per set. The fixed costs each year will be $14,450,000. The company has also spent $1,600,000 on research and development for the new clubs. The plant and equipment required will cost $44,800,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,675,000 that will be returned at the end of the project. The tax rate is 21 percent, and the cost of capital is 12 percent.

Calculate the payback period, the NPV, and the IRR.

How do I respond to this. -->When determining the market price of a bond that is trade-able there are a few things to consider.The amounts, currency and timing of the interest payments and capital repayment due, the quality of the bond, and available redemption yield of other comparable bonds which can be traded in the markets.

You are considering a 3-year project of which details are summarized below. Your required rate of return for capital budgeting purposes is 20 percent.

• Annual sales = 30,000 units
• Unit sales price = $5.00
• Variable costs = $2.00 per unit
• Annual fixed costs = $18,000
• Initial capital investment = $72,000, depreciated to zero over 3 years
• Initial investment in working capital = $20,000, fully recovered at the end of the project
• The tax rate is 25%

a. What is the project’s annual net income?

b. What is the project’s annual operating cash flow?

c. What is the project’s initial capital investment?

d. What is the project’s NPV?  

e. What is the project’s IRR?  

f. Should you accept this project? Why or why not?

A fast-food company invests $2.2 million to buy machines for making Slurpees. These can be depreciated using the MACRS schedule shown above. If the cost of capital is 10%, what is the increase in the net present value (NPV) of the product gained by using MACRS depreciation over straight-line depreciation for three years? A) $28,559 B) $47,599 C) $76,158 D) $190,321

Please help me, I'm not able to use excel in my class so if I could get a step by step that would help me immensely

The Wiley Oakley Co. has just gone public. Under a firm commitment agreement, the company received $20.95 for each of the 6.58 million shares sold. The initial offering price was $22.80 per share, and the stock rose to $29.31 per share in the first few minutes of trading. The company paid $908,000 in legal and other direct costs and $183,000 in indirect costs.
  
What is the net amount raised? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
   
Net amount raised            $
  
What are the total direct costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Direct costs            $
  
What are the total indirect costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Indirect costs            $
  
What are the total costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Total costs            $
  
What was the flotation cost as a percentage of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
  
Flotation cost percentage             %

Find the PV of an annuity payable in arrears of $1,000 p.a. payable quarterly for 25 years at an

effective rate of interest of 6% p.a

Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $21,500, whereas the gas-powered truck will cost $17,960. The cost of capital that applies to both investments is 13%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,860 per year, and those for the gas-powered truck will be $4,600 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck, and decide which to recommend. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places.

You are valuing Soda City Inc. It has $146 million of debt, $71 million of cash, and 196 million shares outstanding. You estimate its cost of capital is 8.4%. You forecast that it will generate revenues of $737 million and $763 million over the next two years. Projected operating profit margin is 39%, tax rate is 21%, reinvestment rate is 57%, and terminal exit value multiple at the end of year 2 is 9. What is your estimate of its share price? Round to one decimal place. ​[Hint: Compute projected FCFF for years 1 and 2 based on info provided, compute terminal value using the exit multiple method, discount it all to find EV, walk the bridge to Equity, divide by number of shares outstanding.]

a. Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay $20,300 per year until the end of that person’s life. The insurance company expects this person to live for 15 more years and would be willing to pay 8 percent on the annuity. How much should the insurance company ask this person to pay for the annuity?
b. A second 65-year-old person wants the same $20,300 annuity, but this person is healthier and is expected to live for 20 more years. If the same 8 percent interest rate applies, how much should this healthier person be charged for the annuity?
c. In each case, what is the new purchase price of the annuity if the distribution payments are made at the beginning of the year?

Yes They May, Inc. has a bond issue outstanding with a $1,000 par value and a maturity of 17 years. The bonds have an annual coupon rate of 14.0% with semi-annual coupon payments. The current market price for the bonds is $922. The bonds may be called in 4 years for 114.0% of par. What is the quoted annual yield-to-maturity for the bonds?

QQQ Corp. needs you to compute the cost of capital of an investment opportunity. QQQ has compiled the following information from public companies that in are same industry as the investment opportunity. Assuming that the project will be financed with only equity, what is the project’s cost of capital? Enter your answer as a percent, do not include the % sign. Round your final answer to two decimals.

XYZ corp. is considering investing in a new machine. The new machine cost will $10,000 installed. Depreciation expense will be $1000 per year for the next five years. At the end of the fifth year XYZ expects to sell the machine for $6000. XYZ will also sell its old equipment today that has a book value of $3000 for $3000. In five years, the old machine will be fully depreciated and have a salvage value of zero. Additionally, XYZ Corp expects that the new machine will increase its EBIT by $2000 in each of the next five years. Assuming that XYZ’s tax rate is 21% and the new machines WACC is 15%, what is the projects NPV. Round your final answer to two decimals.

CURRENT ASSETS INVESTMENT POLICY

Rentz Corporation is investigating the optimal level of current assets for the coming year. Management expects sales to increase to approximately $2 million as a result of an asset expansion presently being undertaken. Fixed assets total $1 million, and the firm plans to maintain a 45% debt-to-assets ratio. Rentz's interest rate is currently 9% on both short-term and long-term debt (which the firm uses in its permanent structure). Three alternatives regarding the projected current assets level are under consideration: (1) a restricted policy where current assets would be only 45% of projected sales, (2) a moderate policy where current assets would be 50% of sales, and (3) a relaxed policy where current assets would be 60% of sales. Earnings before interest and taxes should be 14% of total sales, and the federal-plus-state tax rate is 40%.

1. What is the expected return on equity under each current assets level? Round your answers to two decimal places.
   

   Restricted policy		%
   Moderate policy		%
   Relaxed policy		%

2. 
   
3. In this problem, we assume that expected sales are independent of the current assets investment policy. Is this a valid assumption?
   1. Yes, the current asset policies followed by the firm mainly influence the level of fixed assets.
   2. No, this assumption would probably not be valid in a real world situation. A firm's current asset policies may have a significant effect on sales.
   3. Yes, this assumption would probably be valid in a real world situation. A firm's current asset policies have no significant effect on sales.
   4. Yes, sales are controlled only by the degree of marketing effort the firm uses, irrespective of the current asset policies it employs.
   5. Yes, the current asset policies followed by the firm mainly influence the level of long-term debt used by the firm.
   
   -Select-IIIIIIIVVItem 4
4. 
   
5. How would the firm's risk be affected by the different policies?
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.