Doak Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 15,700 1 6,800 2 8,000 3 7,600 4 6,400 5 – 3,800 The company uses an interest rate of 12 percent on all of its projects. Calculate the MIRR of the project using all three methods.

Assume that sales will grow at 5.00%. The following accounts (cash, accounts receivable, inventory, net fixed assets, accounts payable and accruals, as well as operating costs) are assumed to change with sales and will maintain their current percentage of sales rates into 2016. The dividend payout ratio will remain the same. Long-term debt and notes payable will remain constant into 2016 as will interest expense, as a result. The firm also does not plan to issue any additional common stock or conduct any share repurchases. The firm’s tax rate is 40%. Any additional funds needed will be sourced through a line-of-credit (LOC) and surpluses will be paid out through a special dividend.

BALANCE SHEET AS OF 12/31/2015:

Using the percent-of-sales forecast approach, forecast the 2016 income statement and balance sheet. Be sure the balance sheet balances.

What is the Projected Special Dividend (if any)?

Enter 0 if none.

Submit

Answer format: Currency: Round to: 2 decimal places.

You have found the following historical information for the Daniela Company:

Earnings are expected to grow at 8 percent for the next year. Using the company's historical average PE as a benchmark, what is the target stock price in one year?

Calculating Project NPV Down Under Boomerang Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $3,950,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,175,000 in annual sales, with costs of $1,455,000. The tax rate is 35 percent and the required return is 10 percent. What is the project’s NPV?

What is financial capital?Why is it vital to decision making and the success of an enterprise?Why aren’t profits alone sufficient?

Calisto Launch Services is an independent space corporation and has been contracted to develop and launch one of two different satellites. Initial equipment will cost $740,000 for the first satellite and $810,000 for the second. Development will take 5 years at an expected cost of $150,000 per year for the first satellite; $80,000 per year for the second. The same launch can be used for either satellite and will cost $225,000 at the time of the launch 5 years from now. At the conclusion of the launch, the contracting company will pay Calisto $2,350,000 for either satellite.
Calisto is also considering whether they should consider launching both satellites. Because Calisto would have to upgrade its facilities to handle two concurrent projects, the initial costs would rise by $190,000 in addition to the first costs of each satellite. Calisto would need to hire additional engineers and workers, raising the yearly costs to a total of $380,000. An additional compartment would be added to the launch vehicle at an additional cost of $35,000. As an incentive to do both, the contracting company will pay for both launches plus a bonus of $800,000. Using a present worth analysis (PW) with a MARR of 7.00 percent/year, what should Calisto Launch Services do?

(Do all calculations to 5 decimal places and round final answer to 2 decimal places in terms of k (1 k = 1,000). Tolerance is +/- 1.00.

(I) Calculate PW of first satellite
$

(in thousands)

(II) Calculate PW of second satellite
$

(in thousands)

(III) Calculate PW of both satellites
$

(in thousands)

Microsoft has an equity value of $250B, but has only $10B in debt. Management decides they’d like to increase the D/(D+E) ratio to 40% and use the proceeds to repurchase shares of equity, i.e. a leveraged recapitalization.

a) Before the recapitalization, the debt is considered risk-free and the equity has a beta of 1.13; afterwards, the debt beta becomes 0.3. How much debt does Microsoft issue? By how much has this restructuring changed the riskiness of equity in Microsoft, i.e. what is
the equity beta after the recapitalization?

b. If the risk-free rate is 3% and the expected market return is 9%, what are the expected
returns to equity holders before and after the recapitalization?

Please answer all parts of this question.

Perini Corp is considering a project that has been assigned a discount rate of 14 percent. If the company starts the project today, it will incur an initial cost of $860,000 and will receive cash inflows of $287,000 a year for five years. If the company waits one year to start the project, the initial cost will rise to $988,000 and the cash flows will increase to $341,000 a year for five years. What is the value of the option to wait?

$42,616.74

$38,702.16

$34,951.91

$30,373.29

$26,800.35

Maytag Company is analyzing a proposed 5-year project using standard sensitivity analysis. The company expects to sell 18,000 units, ±5 percent. The expected variable cost per unit is $10.50 and the expected fixed costs are $28,000. The fixed and variable cost estimates are considered accurate within a ±5 percent range. The sales price is estimated at $16.70 a unit, ±5 percent. The project requires an initial investment of $198,000 for equipment that will be depreciated using the straight-line method to zero over the project's life. The equipment can be sold for $25,000 at the end of the project. The project requires $20,000 in net working capital up front. The discount rate is 14 percent and tax rate is 25 percent. What is the operating cash flow in year 2 under the optimistic case scenario?

Omnicom Group is considering spending $350,000 at Time 0 to test a new product. Depending on the test results, the company may decide to spend $786,000 at Time 1 to start production of the product. If the product is introduced and it is successful, it will produce aftertax cash flows of $654,000 a year for Years 2 through 5. The probability of successful test and investment is 60 percent. What is the net present value at Time 0 given a 14 percent discount rate?

$239,246.24

$231,875.30

$238,579.49

$243,618.25

$249,864.27

construct a 10 year amortizing loan table with 8% interest rate. You borrow $30,000 initially and repay it in your ten equal annual year-end payments. Show only the first three years.

In Chapter 7 the concept of efficient markets is discussed. An efficient market is one in which there are many buyers and sellers analyzing securities, and security prices react quickly to new information. How efficient do you think our stock market is? If it is not perfectly efficient, what prevents it from being so? What are ways to make it more efficient?

construct a 10 year amortizing loan table with 8% interest rate. You borrow $30,000 initially and repay it in your ten equal annual year end payments. show only the first 3 steps.