Tannen Industries is considering an expansion. The necessary equipment would be purchased for $19 million, and the expansion would require an additional $4 million investment in net operating working capital. The tax rate is 40%.

a. What is the initial investment outlay? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your answer as a positive value.

b. The company spent and expensed $25,000 on research related to the project last year. Would this change your answer? Explain.

i. No, last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.

ii. Yes, the cost of research is an incremental cash flow and should be included in the analysis.

iii. Yes, but only the tax effect of the research expenses should be included in the analysis.

iv. No, last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.

v. No, last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.

c. The company plans to use a building it owns to house the project. The building could be sold for $5 million after taxes and real estate commissions. How would that fact affect your answer?

i. The potential sale of the building represents an opportunity cost of conducting the project in that building. Therefore, the possible after-tax sale price must be charged against the project as a cost.

ii. The potential sale of the building represents an opportunity cost of conducting the project in that building. Therefore, the possible before-tax sale price must be charged against the project as a cost.

iii. The potential sale of the building represents an externality and therefore should not be charged against the project.

iv. The potential sale of the building represents a real option and therefore should be charged against the project.

v. The potential sale of the building represents a real option and therefore should not be charged against the project.

Company ABC would like to sell an additional 1000 shares using the Dutch Auction method. Using the table below, Bidder D will receive how many shares? Bidder Quantity Price A 500 $30 B 300 $28 C 100 $25 D 400 $20 E 300 $19 Select one: a. 520 shares b. 400 shares c. 378 shares d. 308 shares e. 290 shares

“My husband is 53, and I am 13 years younger. During our 20-year marriage, I have been in and out of the workforce, raising children, and getting my education. Now, I plan to return to full-time employment. I am essentially just getting my career under way as my husband approaches the completion of his. None of the retirement seminars address the issue that not all husbands and wives are the same age, nor do they retire at the same time.” What unique problems do couples with a wide age gap face as they plan for retirement? What are some solutions to the situation? What should be the investment strategy?

Maple, Inc. would like to sell an additional 6,500 shares of stock using the Dutch auction method. The bids received are as follows: Bidder Quantity Price A 1000 $15 B 1500 $25 C 2500 $20 D 1500 $12 E 2000 $18 Bidder B will receive ____________ shares at a price of _____________. Select one: a. 1000; $15 b. 1000; $12 c. 929; $15 d. 1393; $15 e. 1857; $12

Suppose you purchase one share of the stock of Red Devil Corporation at the beginning of year 1 for $44.75. At the end of year 1, you receive a dividend of $2 and buy one more share for $48.75. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share), and sell the shares for $56.75 each. What is the time-weighted return on your investment? (Round your answer to 2 decimal places. Do not round intermediate calculations.)

A drill press is purchased for $12,000. It is anticipated that its market value at the end of any year will be 18% less than its market value at the end of that year. In other words, its market value is reduced by 18% each year. The repair costs are covered by the warranty in Year 1. However, the repair cost in Year 2 is $500 and increases by $500 each year. This machining company has an MARR of 15%. State here on Blackboard the minimum EUAC (to the closest penny) of this drill press and its economic life (in years).

New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,060,000, and it would cost another $18,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $535,000. The machine would require an increase in net working capital (inventory) of $13,500. The sprayer would not change revenues, but it is expected to save the firm $491,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%.

1. What is the Year 0 net cash flow?

b.What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

c.What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.

d.the project's cost of capital is 15 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.

Should the machine be purchased? YES/NO

A company with a tax rate of 40% borrows $100M from lender A at a cost of 8% and $300M from lender B at a cost of 6%. What is the firm’s aggregate cost of borrowing (a) before taxes; and (b) after taxes?

2. Suppose there are two bonds for sale; Bond ART with 7-years to maturity, paying a semi-annual interest payment of $57.75, and available for purchase at $1,017.63; and then a second bond, Bond BMW, for sale at $989.54, maturing in 8-years, and paying $63.65 on a semi-annual basis. What is the YTM of the two bonds? And which one will you add to your portfolio based on the highest yield to maturity?

• YTM of ART = .1118 or 11.18%
• YTM of BMW = .1294 or 12.94%
• Select BMW

PLEASE show work. This is on my finance study guide and we are not allowed to use excel, I have to know how to do it by hand. Right above are the answers, just need to know how to get them

1. The following three defense stocks are to be combined into a stock index in January 2016 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance):

   		Price
   	Shares (millions)		1/1/16			1/1/17			1/1/18
   Douglas McDonnell	180		$	60		$	64		$	77
   Dynamics General	325			68			64			78
   International Rockwell	370			97			86			100

   a. Calculate the initial value of the index if a price-weighting scheme is used. (Enter your answers rounded to 2 decimal places.)

   Index Value:

   b. What is the rate of return on this index for the year ending December 31, 2016? For the year ending December 31, 2017? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

   2016 Return: %

   2017 Return: %

If D/A is .35, according to the balance sheet identity what would be (a) D/E; and (b) the Equity Multiplier?

(B) Assume the following: Sales = $200M; Net Income = $10M; TA = $90M; and there is $0.50 in total debt per dollar of TA. According to the DuPont framework, the measure of operating efficiency would be _______; the measure of asset management efficiency would be _______; the measure of financial leverage would be ______; and the ROE would be _______?

You must select between two options that have a MARR of 12%. Option Red has an initial cost of $50,000 and annual benefits of $13,000 for the next six years. Option Blue has an initial cost of $70,000 and annual benefits of $15,250 for the next eight years. State here on Blackboard what option should be selected using an incremental ROR analysis. You must also state here on Blackboard the increment rate of return (in percent to 2 decimal places like 9.38%) you used to make the selection.

Rachel purchased a car for $18,500 three years ago using a 4-year loan with an interest rate of 9.0 percent. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.

What is the minimum price Rachel would need to receive for her car? Calculate her monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan. (Do not round intermediate calculations and round your final answer to 2 decimal places.)