Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be
$2,000,000,
and the project would generate incremental free cash flows of
$650,000
per year for
5
years. The appropriate required rate of return is
9
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project be accepted?
In: Finance
Carraway Seed Company is issuing a
1,000
par value bond that pays
6
percent annual interest and matures in
8
years. Investors are willing to pay
$935
for the bond. Flotation costs will be
11
percent of market value. The company is in a
20
percent tax bracket. What will be the firm's after-tax cost of debt on the bond?
In: Finance
Hi there,
I am going to plan of a start-up "Fruits and vegetables organic " store
So Can you help me to plan "Business Model Canvas" (understanding of BMC will not be assessed in this assessment.)
If it is possible can you give me 1 reference as well please?
ex: Heidarkhani, A., & khomami, A.A, & Jahanbazi, Q.,& Alipoor, H. (2013). The Role of Management Information Systems ( MIS ) in Decision-Making and Problems of its Implementation, Universal Journal of Management and Social Sciences, Vol. 3, No. 3, pp. 78-89
Thanks a lot
In: Finance
| Northeast Hospital is analyzing a potential project for a new outpatient center | ||||||||||
| Please use the following facts to create a 5-year projection of cash flow for the proposed center. Please create your full income statement first to include all cash and non-cash expenses | ||||||||||
| Calculate the projects NPV, IRR, MIRR, Payback Period (not discounted). Using these calculations, do you recommend that they should proceed with this project? Explain your answer | ||||||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||||
| Total projected Visits | 52500 | |||||||||
| Average Revenue per visit | $ 75.00 | |||||||||
| Average Variable Cost per Visit | $ 50.00 | |||||||||
| Total Fixed Costs | $ 500,000.00 | |||||||||
| Purchase Price for Equipment | $ 4,500,000.00 | |||||||||
| Monthly Rental Cost to Occupy the New Site | $ 5,000.00 | |||||||||
| Salvage Values of the Equipment (end of Year 5) | $ 750,000.00 | |||||||||
| Corporate Tax Rate | 40% | |||||||||
| Cost of Capital | 8% | |||||||||
| Other Assumptions | ||||||||||
| 1) Projected Visits are Expected to increase by 10% in Year 2, 5% in Year 3 and 3% each Year thereafter | ||||||||||
| 2) Negotiation with payers indicate that revenue rate (ie payment per visits) will increase by 2% each year and 5% in year 5 | ||||||||||
| 3) Variable Costs are expected to rise at a rate of 2% per year | ||||||||||
| 4) Fixed Costs are expected to rise at a rate of 1% per year | ||||||||||
| 6) Rent rates will be increased by 2.5% at the end of each year | ||||||||||
| 6) The equipment will depreciate based on the straight-line method of depreciation, a 5-year estimated life and the equipment will be sold at salvage value at the end of year 5 | ||||||||||
| 7) Tax rate will remain constant for the entire 5-year Period and do not assume any tax loss carryforward | ||||||||||
In: Finance
What are the assumptions of the Black-Scholes Option Pricing Model? Discuss each assumption
In: Finance
KFA is considering investing in a new drone technology costing $12 million. It has a 5 year life (no salvage value) and will save KFA $3.5 million/year in pre-tax operating costs. It will need an up-front working capital investment of $300,000. KFA's cost of capital is 8.0% and its tax rate is 21.0%. Their current technology has a $5 million book value but a $1 million salvage value. What are the NPV and IRR of the decision to replace the old technology?
In: Finance
KFA expects to pay the following dividends over the next 4 years: $3.00, $4.00, $5.00, and $6.00. After that, it expects to pay dividends that grow at 4%/year. If the required equity return is 15%, what should be today's share price?
In: Finance
KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon paid semi-annually. Calculate its price for each of the following three YTM scenarios: 4.0%, 6.0%, and 8.0%.
In: Finance
The following financials are presented for Apple, Inc. for the years 2017 and 2018. (All values in USD million)
|
2018 |
2017 |
|
|
Cash and cash equivalents |
25,913 |
20,289 |
|
Marketable securities |
40,388 |
53,892 |
|
Accounts receivable, net |
23,186 |
17,874 |
|
Inventories |
3,956 |
4,855 |
|
Other current assets |
37,896 |
31,735 |
|
Total current assets |
1,31,339 |
1,28,645 |
|
Total non-current assets |
2,34,386 |
2,46,674 |
|
Total Assets |
$3,65,725 |
$3,75,319 |
|
Current liabilities: |
||
|
Accounts payable |
$55,888 |
$44,242 |
|
Other current liabilities |
60,978 |
56,572 |
|
Total current liabilities |
$1,16,866 |
$1,00,814 |
|
Total non-current liabilities |
1,41,712 |
1,40,458 |
|
Total liabilities |
2,58,578 |
2,41,272 |
|
Common Stock |
40,201 |
35,867 |
|
Retained Earnings |
66,946 |
98,180 |
|
Total shareholders' equity |
1,07,147 |
1,34,047 |
|
Total liabilities and shareholders' equity |
3,65,725 |
3,75,319 |
|
Net Sales |
2,65,595 |
2,29,234 |
|
Cost of Sales |
1,63,766 |
1,41,048 |
Required:
In: Finance
James Horner is considering an investment scheme, to fund his house purchase after 6 years, with following cash deposits for a period of 6 years.
|
Year |
1 |
2 |
3 |
4 |
5 |
6 |
|
Cash deposit ($) |
10,000 |
12,000 |
14,000 |
16,000 |
18,000 |
20,000 |
In: Finance
Bonus Value. You have a bond that pays $ 100 of annual interest, with a value of $ 1,000 and matures in 15 years. Your required rate of return is 12%.
a. Calculate the value of the bonus
b. How does the value change if your required rate of return:
1. Increase to 15%
2. Decrease to 8%
In: Finance
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,200 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 21% and can claim 100% bonus depreciation on the investment. Suppose the opportunity cost of capital is 10%. Ignore inflation. a. Calculate project NPV for each company. b. What is the IRR of the after-tax cash flows for each company?
In: Finance
A restaurant prepares 200.00 pizza slices and sells them at a rate of $15.00/slice. Expenses for the restaurant include raw material for pizza at $6.00 per slice, $124.00 for monthly rental and monthly insurance of $20.00. Lost sale are taken as $5.00 per unhappy customer. Leftover pizza can be sold for $2.00. The restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 224.00 slices. How much profit could the restaurant earn today?
In: Finance
Case Study: Rent vs Own
You are considering an option to purchase or rent a single residential property. You can rent it for $4,000 per month and the owner would be responsible for maintenance, property insurance, and property taxes.
Alternatively, you can purchase this property for $300,000 and finance it with an 80% mortgage at 7% interest, 25 year - fixed. The loan can be prepaid at any time with no penalty.
You have done research in the market and found that properties have historically appreciated at an annual rate of 4% per year. Rents on similar properties have also increased at the same rate. Maintenance and insurance are currently $2,500 each per year and they have been increasing at a rate of 4% per year. Property taxes have generally been about 3% of the property value each year.
If you purchase, the plan is to occupy the property for at least four years. Selling costs would be 7% in the year of sale.
Based on this information you must decide:
In: Finance
A Restaurant is open only for 25 days in a month.
Expenses for the restaurant include raw material for each
sandwich at $6.00 per slice, $1,004.00 as monthly rental and
$470.00 monthly as insurance. They consider the cost of lost sales
as $5.00 per item. They are able to sell any leftover sandwiches
for $3. They prepares 200.00 sandwiches and sells them at a rate of
$12.00/sandwich.
Today there was a party at nearby office so the demand for
sandwiches rose to 226.00. How much profit did the restaurant earn
today?
In: Finance