A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4 Project S -$1,000 $882.86 $240 $15 $5 Project L -$1,000 $0 $260 $420 $740.50 The company's WACC is 9.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

Conduct a search for evaluating strategic plans. Review articles or websites for information on evaluating an organization’s strategic plan. Explain how you would evaluate a strategic plan to know whether it needed to be modified. What quality controls would you instill?

Compute the IRR static for Project E. The appropriate cost of capital is 8 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Compute the discounted payback statistic for Project D if the appropriate cost of capital is 12 percent and the maximum allowable discounted payback is four years. (Do not round intermediate calculations and round your final answer to 2 decimal places. If the project does not pay back, then enter a "0" (zero).)

Compute the payback statistic for Project B if the appropriate cost of capital is 12 percent and the maximum allowable payback period is three years. (If the project never pays back, then enter a "0" (zero).)

Growth​ Company's current share price is $ 19.85 and it is expected to pay a $ 1.05 dividend per share next year. After​ that, the​ firm's dividends are expected to grow at a rate of 3.7 % per year. a. What is an estimate of Growth​ Company's cost of​ equity? b. Growth Company also has preferred stock outstanding that pays a $ 2.30 per share fixed dividend. If this stock is currently priced at $ 28.30​, what is Growth​ Company's cost of preferred​ stock? c. Growth Company has existing debt issued three years ago with a coupon rate of 5.9 %. The firm just issued new debt at par with a coupon rate of 6.5 %. What is Growth​ Company's cost of​ debt? d. Growth Company has 5.2 million common shares outstanding and 1.4 million preferred shares​ outstanding, and its equity has a total book value of $ 49.9 million. Its liabilities have a market value of $ 19.6 million. If Growth​ Company's common and preferred shares are priced as in parts ​(a​) and ​(b​), what is the market value of Growth​ Company's assets? e. Growth Company faces a 35 % tax rate. Given the information in parts ​(a​) through ​(d​), and your answers to those​ problems, what is Growth​ Company's WACC? ​ Note: Assume that the firm will always be able to utilize its full interest tax shield.

7. A firm earns $800,000 per year, has 5% cost of debt, is worth $5 million, and has $2 million in equity and $3 million in debt. It’s considering a project with a 75 percent chance of earning $2 million, but a 25 percent chance of failing and going bankrupt. What is the expected return of this investment for the bond holders and equity holders?

Net Present Value Method, Internal Rate of Return Method, and Analysis

The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:

The radio station requires an investment of $983,820, while the TV station requires an investment of $2,055,600. No residual value is expected from either project.

Required:

1a. Compute the net present value for each project. Use a rate of 10% and the present value of an annuity of $1 in the table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest whole dollar.

1b. Compute a present value index for each project. If required, round your answers to two decimal places.

2. Determine the internal rate of return for each project by (a) computing a present value factor for an annuity of $1 and (b) using the present value of an annuity of $1 in the table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest whole percent.

What is the management fee (1) on a per available room basis and (2) as a percentage of total revenue for a 255-room hotel located in California that had an occupancy level of 62%, ADR of $84.53, a room revenue to total revenue % of 56.4%, and a gross operating profit % of 24.8%? The management fee agreement stipulated that the company would receive 3% of gross revenue, and 10% of gross operating profit.

   Please calculate annual room revenue (round to two decimal places) $ ___

Annual total revenue (round to two decimal places) $ ___

GOP (round to two decimal places) $ ____

  Mgmt fee base fee (round to two decimal places) $ ___

  Mgmt fee incentive fee (round to two decimal places) $ ___

      Total mgmt fee (round to whole number) $ ___

Mgmt fee on PAR basis (round to two decimal places) $ ___ PAR/yea

Mgmt fee as % of total revenue (round to two decimal places) ___%

Explain correct and incorrect ways to use firm guidance.

Alternative Dividend Policies

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years, and in 2015 Boehm paid dividends of $3.1 million on net income of $20.0 million. However, in 2016 earnings are expected to jump to $36 million, and Boehm plans to invest $14.2 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2016 Boehm will return to its previous 8% earnings growth rate. Its target debt ratio is 35%.

1. Calculate Boehm's total dividends for 2016 under each of the following policies:
   1. Its 2016 dividend payment is set to force dividends to grow at the long-run growth rate in earnings. Round your answer to the nearest dollar. Enter your answers in dollars. For example: $2.9 million should be entered as $2,900,000.
      $  
      
   2. It continues the 2015 dividend payout ratio. Round your answer to the nearest dollar. Enter your answers in dollars. For example: $2.9 million should be entered as $2,900,000.
      $  
      
   3. It uses a pure residual policy with all distributions in the form of dividends (35% of the $14.2 million investment is financed with debt). Round your answer to the nearest dollar. Enter your answers in dollars. For example: $2.9 million should be entered as $2,900,000. Enter your answers in dollars. For example: $2.9 million should be entered as $2,900,000.
      $  
      
   4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy. Round your answer to the nearest dollar. Enter your answers in dollars. For example: $2.9 million should be entered as $2,900,000.
      $  
   
   
2. Which of the preceding policies would you recommend? Restrict your choices to the ones listed.
   -Select-1234Item 5

4. Three are three projects listed below. The firm’s required rate of return is 13%.

Year Project AB Project LM Project UV

0 $ (90,000) $ (100,000) $ (96,500)

1 39,000 0 (55,000)

2 39,000 0 100,000

3 39,000 147,500 100,000

a) Compute net present value and internal rate of return of each project

Project AB LM UV

NPV

IRR

b) If three projects are mutually exclusive, which one should be chosen?

c) What is the discount rate when NPVAB equals NPVUV (i.e., crossover rate)?

ΔCF0= ΔCF1= ΔCF2= ΔCF3=

IRR=

d) Compute the traditional payback period for each project.

e) Please follow the steps below to compute modified IRR (MIRR) of Project UV.

1) PV of cash outflows:

2) FV of cash inflows:

3) MIRR

By applying capital to investments with long-term benefits, the company is attempting to produce value. This value is dependent on expected future cash flows as well as on the cost of funds.” Explain this statement with regards to the role of cost of capital in financial management decisions.

Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 40%, and a 9% cost of capital is appropriate for the project.

1. Calculate the project's NPV. Round your answer to the nearest dollar.
   $  
   Calculate the project's IRR. Round your answer to two decimal places.
        %
   Calculate the project's MIRR. Round your answer to two decimal places.
        %
   Calculate the project's payback. Round your answer to two decimal places.
        
2. 
   
3. 
   
4. 
   
5. Assume management is unsure about the $110,000 cost savings - this figure could deviate by as much as plus or minus 20%. Calculate the NPV if cost savings value deviate by plus 20%. Round your answer to the nearest dollar.
   $  
   Calculate the NPV if cost savings value deviate by minus 20%. Round your answer to the nearest dollar.
   $
6. 
   
7. 
   
8. 
   
9. Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the working capital (WC) requirement. She asks you to use the following probabilities and values in the scenario analysis:

   Scenario	Probability	Cost Savings	Salvage Value	WC
   Worst case	0.30	$  88,000	$28,000	$40,000
   Base case	0.40	110,000	33,000	35,000
   Best case	0.30	132,000	38,000	30,000

   
   Calculate the project's expected NPV. Round your answer to the nearest dollar.
   $  
   Calculate the project's standard deviation. Round your answer to the nearest dollar.
   $  
   Calculate the project's coefficient of variation. Round your answer to two decimal places.