A potential new project would cost $1000 today. The 1st stage of the project would last 2 years. There are 2 possible scenarios for Stage 1 net cash flows in years 1 and 2: 1) $1,060 per year, with 50% probability; or 2) $0 per year, with 50% probability. If the 1st stage outcome is good (with non-zero outcomes), the firm will reinvest an equal amount in year 2 (the same amount invested at year 0) and extend the project into Stage 2 (years 3 and 4). The possible Stage 2 outcomes are either: 1) net cash flows in years 3 and 4 doubling relative to the good Stage 1 outcome (with probability of 50%), or 2) net cash flows of 0 in years 3 and 4 (with probability of 50%). If the Stage 1 outcome is bad, the firm will abandon the project at the conclusion of Stage 1.

The cost of capital is 9%. The overall expected NPV of the project (at year 0), considering Stage 1 and the option to expand the project into Stage 2, is $_______.

You have just taken out an $18,000 car loan with a 6% ​APR, compounded monthly. The loan is for five years. When you make your first payment in one​ month, how much of the payment will go toward the principal of the loan and how much will go toward​ interest?

QUESTION

When you make your first​ payment, ​$????? will go toward the principal of the loan and ​$???? will go toward the interest

How much must you invest today at 6% interest in order to see your investment grow to $8,000 in 10 years?

 You would like to have ​$50,000 in 12 years. To accumulate this​ amount, you plan to deposit an equal sum in the bank each year that will earn 10 percent interest compounded annually. Your first payment will be made at the end of the year. a.  How much must you deposit annually to accumulate this​ amount? b.  If you decide to make a large​ lump-sum deposit today instead of the annual​ deposits, how large should this​ lump-sum deposit​ be? ​ (Assume you can earn 10 percent on this​ deposit.) c.  At the end of five​ years, you will receive ​$15,000 and deposit this in the bank toward your goal of ​$50,000 at the end of year 12. In addition to the​ lump-sum deposit, how much must you deposit in equal annual​ amounts, beginning in year 1 to reach your​ goal? ​ (Again, assume you can earn 10 percent on your​ deposits.)

HMK Enterprises would like to raise $10.0 million to invest in capital expenditures. The company plans to issue​ five-year bonds with a face value of $1,000 and a coupon rate of 6.50%

​(annual payments). The following table summarizes the yield to maturity for​ five-year (annual-payment) coupon corporate bonds of various​ ratings:

Rating    AAA AA A    BBB    BB

YTM    6.20%    6.30% 6.50% 6.90% 7.50%

a. Assuming the bonds will be rated​ AA, what will be the price of the​ bonds?

b. How much of the total principal amount of these bonds must HMK issue to raise $10.0

Can you please provide the steps needed to reach the answer?

million​ today, assuming the bonds are AA​ rated? (Because HMK cannot issue a fraction of a​ bond, assume that all fractions are rounded to the nearest whole​ number.)

c. What must be the rating of the bonds for them to sell at​ par?

d. Suppose that when the bonds are​ issued, the price of each bond is $959.54. What is the likely rating of the​ bonds? Are they junk​ bonds?

a. Assuming the bonds will be rated​ AA, what will be the price of the​ bonds?

The price of the bonds will be? (Round to the nearest​ cent.)

Q10

St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $24,000 to $48,000 per year. The new machine will cost $90,000, and it will have an estimated life of 8 years and no salvage value. The new machine will be depreciated over its 5-year MACRS recovery period; so the applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. The applicable corporate tax rate is 40%, and the firm's WACC is 16%. The old machine has been fully depreciated and has no salvage value.

What is the NPV of the project? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent.
$  

Should the old riveting machine be replaced by the new one?

Problem 3-5

Axtel Company has the following financial statements.

In addition, Axtel retired stock for $1,000,000 and paid a dividend of $1,727,000. Depreciation for the year was $1,036,000. Construct a statement of cash flows for Axtel for 20X1. (Hint: Retiring stock means buying it back from shareholders. Assume the purchase was made at book value, and treat it like a negative sale of stock.) Enter your answers in thousands. For example, an answer of $200 thousands should be entered as 200, not 200000. Use a minus sign, to indicate any decreases in cash or cash outflows.

Yasser Ben Rashid must earn a minimum rate of return of 12% to be adequately compensated for the risk of the following investment:

Initial Investment $16,000

End of Year Income   

   1 $7,000

   2 $4,000

   3 $6,000

   4 $3,000

   5    $3,100

a. Estimate the IRR on this investment.

b. On the basis of your finding in part a, should Yasser make the proposed investment? Explain.

true/false
1. Financial leverage index = return on equity/return on assets
2. Market to book ratio = stock price/earning per share
3. Total return to shareholders = stock price appreciation .
4. Working capital turnover measures inventory management.

1. What drives the value of a stock?

2. Is the current U.S. stock market over-valued or under-valued? Explain

Briefly detailed answers, 400 words for each answer at least, with references.

Thank you I really do appreciate you help

Give an example of why under purchasing power parity a change in nominal exchange rate does not affect a firm or country.