• Opportunity A: a "me-too" oncology drug currently in Phase 3 clinical trials that requires a $100 million investment today (year 0), and if successful, provides annual profits of $100 million over its remaining 10 year patent starting in year 3 (otherwise it returns nothing). Suppose the probability of success is 50%.
• Opportunity B: a combination therapy of blinatumomab and chemotherapy designed to cure acute lymphoblastic leukemia that requires a $200 million investment today (year 0), and if successful, provides annual profits of $2 billion over its remaining 10 year patent starting in year 11 (otherwise it returns nothing). Suppose the probability of success is 5%.

A) What are the expected annual cash flows of opportunity A for years 3 to 12? (Note: Your answer should be expressed in units of millions of dollars.)

Expected annual cash flow = $___ million

B) What are the expected cash flows of opportunity B for years 11 to 20? (Note: Your answer should be expressed in units of millions of dollars.)

Expected annual cash flow = $____ million

C) Suppose we calculate the NPV of each opportunity by discounting the expected cash flows. Assume a discount rate of 12% per year for opportunity A, and 20% per year for opportunity B. What is the NPV of each opportunity? (Note: Your answer should be expressed in units of millions of dollars.)

NPV opportunity A = $____ million

NPV opportunity B = $____ million

Looking Good Co. has identified an investment project with the following cash flows. Year 1 $1000, Year 2 $200, Year 3 $800 and Year 4 $1500. If the discount rate is 12%, what is the present value of these cashflows?

The Umbrella Corporation has the following Income statement and balance sheet for 1993. The firm paid out 50% of it's Net Income as Dividends. What is the firms Cash Flow From Assets from the Free Cash Flow Perspective? (in this problem you must use the Free Cash Flow method to get CFFA, using the Investors perspective method will not give you the same answer due to the limitations of the system.)

(Round to nearest penny and do not enter commas, e.g. 1234.56)

Let's say you deposited ​$150,000 in a 529 plan​ (a tax advantaged college savings​ plan) hoping to have ​$410,000 available 15 years later when your first child starts college. ​ However, you​ didn't invest very​ well, and 2 years later the account balance dropped to ​$130,000. ​ Let's look at what you need to do to get the college savings plan back on track. a.  What was the original annual rate of return needed to reach your goal when you started the fund 2 years​ ago? b. With only ​$130,000 in the fund and 13 years remaining until your first child starts​ college, what annual rate of return would the fund have to make to reach your ​$410,000 goal if you add nothing to the​ account? c.  Shocked by your experience of the past 2 ​years, you feel the college fund has invested too much in​ stocks, and you want a​ low-risk fund in order to ensure you have the necessary ​$410,000 in 13 years. You are willing to make​ end-of-the-month deposits to the fund as well. You find you can get a fund that promises to pay a guaranteed annual return of 4.5 percent which is compounded monthly. You decide to transfer the ​$130,000 to this new fund and make the necessary monthly deposits. How large of a monthly deposit must you make into this new​ fund? d.  After seeing how large the monthly deposit would be​ (in part c of this​ problem), you decide to invest the ​$130,000 today and ​$400 at the end of each month for the next 13 years into a fund consisting of 50 percent stock and 50 percent bonds and hope for the best. What APR would the fund have to earn in order to reach your ​$410,000 ​goal? -Round to two decimal places

Initial public offering  

On April​ 13, 2017​, Yext Inc. completed its IPO on the NYSE. Yext sold 10,500,000 shares of stock at an offer price of ​$13 with an underwriting discount of ​$0.76 per share.​ Yext's closing stock price on the first day of trading on the secondary market was ​$13.43​, and 85,489,470 shares were outstanding.

a. Calculate the total proceeds for​ Yext's IPO.

b. Calculate the percentage underwriter discount.

c. Calculate the dollar amount of the underwriting fee for​ Yext's IPO.

d. Calculate the net proceeds for​ Yext's IPO.

e. Calculate​ Yext's IPO underpricing.

f. Calculate​ Yext's market capitalization.

1. Company Z is evaluating a project that will increase annual sales by $150,000 and annual cash costs by $115,000. The project will initially require $98,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 32 percent. What is the NPV of this project if the required rate of return is 7% and the fixed assets required for the project will be scrapped at the end of the project?

I need the NPV of this project. Tax Rate is 40% and the WACC is 11.49%

This project requires an initial investment of $2,000,000 in equipment which will cost an additional $250,000 to install. The firm will use the attached MACRS depreciation schedule to expense this equipment. Once the equipment is installed, the company will need to increase net working capital by $100,000. The project will last 6 years at which time the market value for the equipment will be $30,000.

The project will project a product with a sales price of $120.00 per unit and the variable cost per unit will be $65.00. The fixed costs would be $500,000 per year. Because this project is very different to current products sold by the business, management has imposed a 2 percentage point premium above its current WACC as the valuation hurdle it must meet or surpass.

Years 2014 2015 2016 2017 2018 2019 Forecasted Units Sold 21,000 55,000 44,000 28,000 25,000 11,000

DataPoint Engineering is considering the purchase of a new piece of equipment for $280,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $180,000 in nondepreciable working capital. $45,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

The tax rate is 25 percent. The cost of capital must be computed based on the following:

a. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annual depreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.)

b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not round intermediate calculations and round your answers to 2 decimal places.)

c. Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

d-1. Determine the net present value. (Use the WACC from part c rounded to 2 decimal places as a percent as the cost of capital (e.g., 12.34%). Do not round any other intermediate calculations. Round your answer to 2 decimal places.)

d-2. Should DataPoint purchase the new equipment?

The Dilana Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 1.5 percent per period. The firm has current sales of 3,500 units per month at a price of $71 per unit. The new policy is expected to increase sales to 3,550 units at a price of $71 per unit. The cost per unit is constant at $38. What is the incremental cash inflow of the new policy?

YOU are the financial officer at an Austrian company that wants to BUY USD 1.000.000 of solar equipment from a U.S. producer. You need to pay for the equipment in 90 days.

You have the following information available:

Spot rate $1.125 / €  90-Day forward rate $1.09 (actual spot rate expected based on historical distribution: $1.05 - $1.12)

Interest rates: US $ 4% EUR 2%

FX options available:

Contract size $125.000

CALLS : June (3 months ahead), strike price $1.10/€, Premium € 2000 per contract

PUTS : June (3 months ahead), strike price $1.00/€

Premium €1000 per contract

Futures contracts available:

Contract size $250.000

June contract, FX rate $1.11

Margin to maintain 10%

Describe your foreign exchange exposure

Describe how you would use the following instruments to hedge, i.e. how would each instrument work? (more important to describe than to calculate): Forward Contract , Options Contract

Would you recommend that the company hedge this transaction? Which instrument (any of the instruments, not just the two above) would you recommend?

our company is considering a machine that will cost $ 6,582 at Time 0 and which can be sold after 3 years for $ 231 . To operate the machine, $ 418 must be invested at Time 0 in inventories; these funds will be recovered when the machine is retired at the end of Year 3. The machine will produce sales revenues of $ 981 /year for 3 years; variable operating costs (excluding depreciation) will be 56 percent of sales. Operating cash inflows will begin 1 year from today (at Time 1). The machine is in the 3-year MACRS class. The MACRS class has depreciation of 33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4. The company has a 30 percent tax rate, enough taxable income from other assets to enable it to get a tax refund from this project if the project's income is negative, and a 10 percent cost of capital. Inflation is zero. What are the terminal cash flows associated with ending this project?

Note, I want only the Year 3 terminal cash flows, not the year 3 operating cash flows. Show your answer to the nearest $.01 Do not use the $ symbol in your answer.

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 5.4%. The probability distributions of the risky funds are:

The correlation between the fund returns is 0.0684.

What is the Sharpe ratio of the best feasible CAL? (Do not round intermediate calculations. Round your answer to 4 decimal places.)

Due to Coronavirus describe the financial impact of this Pandemic on the health care setting and how the Healths Care administrator will manage the budget with this new inquired.

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ROA (Return on assets) is a rate that measures the net income compared to the total assets. In other words, it shows how much the company is generating for each dollar invested. It is helpful to compare the results of the companies in the market. A company can be very lucrative, but not efficient. It can demand too much investment to obtain that profit.

The ROE (Return on equity) is very similar to ROA, but it includes the debt of the company. It is calculated by dividing the Net Income by the Stakeholder's equity. Since the stakeholder's equity is the total assets minus the debt of the company, this index shows the return compared to the own capital of the company