Your business is offered a contract that pays $386,427 every quarter for three years. What is the contract worth to you today if the discount rate is 7.03% per quarter.

Given the following information for O'Hara Marine Co., calculate the depreciation expense: sales = $73,000; costs = $37,200; addition to retained earnings = $9,800; dividends paid = $2,620; interest expense = $2,950; tax rate = 24 percent. (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)

Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $187,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $124,000, variable costs of $33,100, and fixed costs of $12,650. The project will also require net working capital of $3,250 that will be returned at the end of the project. The company has a tax rate of 34 percent and the project's required return is 8 percent. What is the net present value of this project?

Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply:

1. The machinery falls into the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.)
2. Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance.
3. The firm's tax rate is 25%.
4. The loan would have an interest rate of 15%. It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year 4.
5. The lease terms call for $420,000 payments at the end of each of the next 4 years.
6. Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $300,000 at the end of the 4th year.

1. What is the cost of owning? Enter your answer as a positive value. Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.

   $  

2. What is the cost of leasing? Enter your answer as a positive value. Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.

   $  

3. What is the NAL of the lease? Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar.

   $  

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P9-5 (similar to) The cost of debt   Gronseth Drywall​ Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the firm that different maturities will carry different coupon rates and sell at different prices. The firm must choose among several alternatives. In each​ case, the bonds will have a ​$1,000 par value and flotation costs will be ​$30 per bond. The company is taxed at 28​%. Use the approximation formula to calculate the ​after-tax cost of financing with the following alternative.  ​(Click on the icon located on the​ top-right corner of the data table below in order to copy its contents into a​ spreadsheet.) Coupon rate Time to maturity Premium or discount 12​% 16 years negative $180 The​ after-tax cost of financing using the approximation formula is nothing​%. ​(Round to two decimal​ places.)

12% 16 -$180

2. Starkey Percussion, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company’s class A common stock has paid a dividend of $7.25 per share per year for the last 12 years. Management expects to continue to pay at that amount for the foreseeable future. Paul Harrison purchased 1,000 shares of Starkey class A common 10 years ago at a time when the required rate of return for the stock was 13%. He wants to sell his share today. The current required rate of return for the stock is 11%. How much capital gain or loss will Paul have on his shares?

Cost of common stock equity   Ross Textiles wishes to measure its cost of common stock equity. The​ firm's stock is currently selling for ​$65.88. The firm just recently paid a dividend of ​$3.98. The firm has been increasing dividends regularly. Five years​ ago, the dividend was just ​$3.04. After underpricing and flotation​ costs, the firm expects to net ​$61.93 per share on a new issue. a.  Determine average annual dividend growth rate over the past 5 years. Using that growth​ rate, what dividend would you expect the company to pay next​ year? b. Determine the net​ proceeds, Nn​, that the firm will actually receive. c.  Using the​ constant-growth valuation​ model, determine the required return on the​ company's stock, r Subscript s​, which should equal the cost of retained​ earnings, r Subscript r. d.  Using the​ constant-growth valuation​ model, determine the cost of new common​ stock, r Subscript n.

Compute the cost of the​ following:

a. A bond that has ​$1000 par value​ (face value) and a contract or coupon interest rate of 11 percent. A new issue would have a floatation cost of 6 percent of the ​$1125 market value. The bonds mature in 9 years. The​ firm's average tax rate is 30 percent and its marginal tax rate is 32 percent.

b. A new common stock issue that paid a ​$1.50 dividend last year. The par value of the stock is​ $15, and earnings per share have grown at a rate of 7 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant​ dividend-earnings ratio of 30 percent. The price of this stock is now ​$31​, but 8 percent flotation costs are anticipated.

c. Internal common equity when the current market price of the common stock is ​$48. The expected dividend this coming year should be ​$3.00​, increasing thereafter at an annual growth rate of 11 percent. The​ corporation's tax rate is 32 percent.

d. A preferred stock paying a dividend of 9 percent on a ​$100 par value. If a new issue is​ offered, flotation costs will be 12 percent of the current price of ​$175. e. A bond selling to yield 12 percent after flotation​ costs, but before adjusting for the marginal corporate tax rate of 32 percent. In other​ words, 12 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows​ (principal and​ interest).

a. What is the​ firm's after-tax cost of debt on the​ bond? % ​(Round to two decimal​ places.)

b. What is the cost of external common​ equity? ​% ​(Round to two decimal​ places.)

c. What is the cost of internal common​ equity? ​% ​(Round to two decimal​ places.)

d. What is the cost of capital for the preferred​ stock? ​% ​(Round to two decimal​ places.)

e. What is the​ after-tax cost of debt on the​ bond? % ​(Round to two decimal​ places.)

Stocks A, B, and C have expected returns of 20 percent, 20 percent, and 16 percent, respectively, while their standard deviations are 49 percent, 20 percent, and 20 percent, respectively. If you were considering the purchase of each of these stocks as the only holding in your portfolio and the risk-free rate is 0 percent, which stock should you choose? (Round answers to 2 decimal places, e.g. 15.25.)

1.Coefficient of variation of Stock A

2.Coefficient of variation of Stock B

3.Coefficient of variation of Stock C

A)Project L requires an initial outlay at t = 0 of $60,000, its expected cash inflows are $12,000 per year for 9 years, and its WACC is 13%. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

B)Project L requires an initial outlay at t = 0 of $70,000, its expected cash inflows are $16,000 per year for 9 years, and its WACC is 13%. What is the project's discounted payback? Do not round intermediate calculations. Round your answer to two decimal places.

C)What if Project L requires an initial outlay at t = 0 of $72,000, its expected cash inflows are $14,000 per year for 12 years, and its WACC is 11%. What is the project's payback? Round your answer to two decimal places.

Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year’s dividend is $9, the market capitalization rate is 11% and next year’s EPS is $16. What is Z-prime’s stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)