Estimate Cash flows of the three-year project by filling in the values in the table below. ·   Equipment will cost $40,000, Shipping and installation charges for the equipment are expected to total $5,000. ·The Machine is depreciated using straight line method to a value of $0 at the end of it's life. ·Net working capital is $10,000 initially and $5,000 in year 1. All investment in net working capital is recovered back at the end of the project ·Total revenues will be $50,000 in year 1, $60,000 in year 2 and $75,000 in year 3. ·Operating costs = $25,000 during the first year and increase at a rate of 6 percent per year over the 3-year project ·Marginal tax rate is 40 percent. Cost of capital = 10%

Distinguish between accounting and contemporary managerial finance

1. Ben invested $8,500 twenty years ago with an insurance company that has paid him 6 percent simple interest on his funds. Charles invested $8,500 twenty years ago in a fund that has paid him 6 percent interest, compounded annually. How much more interest has Charles earned than Ben over the past 20 years?

2. You have $5,000 you want to invest for the next 45 years. You are offered an investment plan that will pay you 6 percent per year for the next 15 years and 10 percent per year for the last 30 years. How much will you have at the end of the 45 years?

3. You want to purchase a new condominium that costs $287,500. Your plan is to pay 25 percent down in cash and finance the balance over 15 years at 3.65 percent. What will be your monthly mortgage payment including principal and interest?

**Can you explain the PV, n, i, PMT, and FV? I just need to know how its the right answer***

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

1. What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    $   million

   Project B:    $   million

   What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:  $   million

   Project B:  $   million

   What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:  $   million

   Project B:  $   million

2. What are the projects' IRRs assuming the WACC is 5%? Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    %

   Project B:    %

   What are the projects' IRRs assuming the WACC is 10%? Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    %

   Project B:    %

   What are the projects' IRRs assuming the WACC is 15%? Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    %

   Project B:    %

3. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 1.66%.)

   --Select-Project A Project B Neither

   If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 1.66%.)

   -Select-Project A Project B Neither

4. If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 1.66%.)

   -Select-Project A Project B Neither

YEAR CASH FLOWS PROJECT A CASH FLOWS PROJECT B 0 ​-20000 ​-20000 1 9000 6000 2 10000 11000 3 12000 15000 Which project should you choose if they are mutually exclusive and the appropriate discount rate​ (required return) for both is​ 15%? Enter only the letter A or B.   nothing Which project should you choose if they are mutually exclusive and the appropriate discount rate​ (required return) for both is​ 20%?  Enter only the letter A or B.   nothing What is the crossover​ rate? Enter answer with two decimal places and no​ %, such as 10.75.   nothing​

1. Determining the optimal capital structure

Understanding the optimal capital structure

Review this situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp. has gathered the following financial information to help with the analysis.

Which capital structure shown in the preceding table is Transworld Consortium Corp.’s optimal capital structure?

Debt ratio = 50%; equity ratio = 50%

Debt ratio = 70%; equity ratio = 30%

Debt ratio = 40%; equity ratio = 60%

Debt ratio = 60%; equity ratio = 40%

Debt ratio = 30%; equity ratio = 70%

Consider this case:

Globex Corp. currently has a capital structure consisting of 30% debt and 70% equity. However, Globex Corp.’s CFO has suggested that the firm increase its debt ratio to 50%. The current risk-free rate is 2.5%, the market risk premium is 7.5%, and Globex Corp.’s beta is 1.25.

If the firm’s tax rate is 25%, what will be the beta of an all-equity firm if its operations were exactly the same?     

A. 0.86

B. 1.14

C. .9

D. 0.95

Now consider the case of another company:

US Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 8%, and its tax rate is 25%. It currently has a levered beta of 1.25. The risk-free rate is 2.5%, and the risk premium on the market is 7.5%. US Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm’s level of debt will cause its before-tax cost of debt to increase to 10%.

First, solve for US Robotics Inc.’s unlevered beta.     

A. 0.95

B. 0.86

C. 1.05

D. 1.14

Use US Robotics Inc.’s unlevered beta to solve for the firm’s levered beta with the new capital structure.     

A. 1.82

B. 2.02

C. 2.22

D. 1.92

Use US Robotics Inc.’s levered beta under the new capital structure, to solve for its cost of equity under the new capital structure.     

A. 17.65%

B. 14.12%

C. 15.885%

D. 20.297%

What will the firm’s weighted average cost of capital (WACC) be if it makes this change in its capital structure?

8.12%

12.76%

8.70%

11.60%

MIRR unequal

lives.

Grady Enterprises is looking at two project opportunities for a parcel of land the company currently owns. The first project is a​ restaurant, and the second project is a sports facility. The projected cash flow of the restaurant is an initial cost of

​$1 comma 410 comma 0001,410,000

with cash flows over the next six years of

​$190 comma 000190,000

​(year one),

​$280 comma 000280,000

​(year two),

$ 320 comma 000$320,000

​(years three through​ five), and

​$1 comma 730 comma 0001,730,000

​(year six), at which point Grady plans to sell the restaurant. The sports facility has the following cash​ flows: an initial cost of

​$2 comma 340 comma 0002,340,000

with cash flows over the next four years of

​$440 comma 000440,000

​(years one through​ three) and

​$3 comma 060 comma 0003,060,000

​(year four), at which point Grady plans to sell the facility. The appropriate discount rate for the restaurant is

9.09.0​%

and the appropriate discount rate for the sports facility is

12.012.0​%.

What are the MIRRs for the Grady Enterprises​ projects? What are the MIRRs when you adjust for the unequal​ lives? Do the MIRR adjusted for unequal lives change the decision based on the​ MIRRs? ​Hint: Take all cash flows to the same ending period as the longest project.

If the appropriate reinvestment rate for the restaurant is

9.09.0​%,

what is the MIRR of the restaurant​ project?

round to two decimal places

Year Project A Project B 0 −$330 −$330 1 160 230 2 160 230 3 160 230 4 160 a. If the opportunity cost of capital is 12%, calculate NPV for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Project NPV A $ 485.98 B 552.42 b. Which of these projects is worth pursuing if you have enough funds and they are not mutually exclusive? Project A Project B Both

Could you please write a short analysis of economic and respective industry outlook in the 11 sectors of S&P 500 in 2019? Thank you

Compensating balance versus discount loan   Weathers Catering​ Supply, Inc., needs to borrow $ 154 comma 000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8.9 % subject to a 10.4 % compensating balance.  ​(​Note: Weathers currently maintains $ 0 on deposit in State​ Bank.) Frost Finance Co. has offered to lend the funds at an annual rate of 8.9 % with​ discount-loan terms. The principal of both loans would be payable at maturity as a single sum. a.  Calculate the effective annual rate of interest on each loan. b.  What could Weathers do that would reduce the effective annual rate on the State Bank​ loan?

Cost of commercial paper   Commercial paper is usually sold at a discount. Fan Corporation has just sold an issue of 81​-day commercial paper with a face value of ​$1.2 million. The firm has received initial proceeds of ​$1 comma 164 comma 759. ​ (Note​: Assume a 365​-day ​year.) a.  What effective annual rate will the firm pay for financing with commercial​ paper, assuming that it is rolled over every  81 days throughout the​ year? b. If a brokerage fee of ​$11 comma 741 was paid from the initial proceeds to an investment banker for selling the​ issue, what effective annual rate will the firm​ pay, assuming that the paper is rolled over every 81 days throughout the​ year?

1. Explain how calculating the future value of cash flows is different from calculating the present value of cash flows.

2. Explain the annuity transformation method. Provide an example.