Your division is considering a project with the following net cash flows (in millions): Period 0 1 2 3 Project A -$25 $5 $10 $17 What is the project's NPV assuming the WACC is 0.06?

You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $250,000, and it would cost another $62,500 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $125,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $5,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $56,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

1. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus sign.

   $  

2. What are the project's annual cash flows in Years 1, 2, and 3? Round your answers to the nearest cent.

   In Year 1 $  

   In Year 2 $  

   In Year 3 $  

3. If the WACC is 11%, should the spectrometer be purchased?

   _____YesNo

Suppose there is a Treasury bond with exactly 15 years left to maturity, a 5% coupon, par of 100, and a 2.6% yield-to-maturity? (Recall that Treasury notes pay semi-annual coupons.) What is the modified duration of this bond?

A 3.41

B 7.99

C 11.17

D 14.23

A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:

Project X: CF0= -$1,000, CF1= $110, CF2= $300, CF3= $370, CF4= $750

Project Y: CF0= -$1,000, CF1= $900, CF2= $110, CF3= $50, CF4= $50

The projects are equally risky, and their WACC is 13%. What is the MIRR of the project that maximizes shareholder value? Round your answer to two decimal places. Do not round your intermediate calculations.

consider the liquidity preference theory of the term structure of interest rates. On average

Pecking order hypothesis. Rachel can raise capital from the sources in the table: What is​ Rachel's weighted average cost of capital if she needs to raise

a. $10,000?

b. $20,000​?

c. $30,000​?

Suppose a project has a $1,298 cost outlay in Year 0, $1000 net opertating cash inflows for Years 1 - 5, and a $1,500 non-operating cash flow in Year 5. Assuming an 15% cost of capital, what is the project's equivalent annual annuity?

Year Cash Flow 0 –$ 15,900 1 7,930 2 9,490 3 8,970 4 7,210 5 – 3,580 Required: The company uses an interest rate of 12 percent on all of its projects. Calculate the MIRR of the project using all three methods. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) MIRR Discounting approach % Reinvestment approach % Combination approach %

1. Bohemian Interior Design has projected the following quarterly sales. The accounts receivable at the beginning of the year is $1,030,000 and the collection period is 58 days. What are collections for the first quarter and second quarters? (5 points)

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$356,000 –$40,000 1 31,000 23,000 2 42,000 15,200 3 50,000 14,100 4 445,000 11,200 The required return on these investments is 13 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Payback period Project A years Project B years (b) What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g.,32.16).) Net present value Project A $ Project B $ (c) What is the IRR for each project? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Internal rate of return Project A % Project B % (d) What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).) Profitability index Project A Project B (e) Based on your answers in (a) through (d), which project will you finally choose?

Geoffrey’s Toy Box currently has sales of $1,000,000, and its days sales outstanding is 30 days. The new CFO estimates that offering longer credit terms would (1) increase the days sales outstanding to 50 days and (2) increase sales to $1,200,000. However, bad debt losses, which were 2 percent on the old sales, would increase to 5 percent on the incremental sales while bad debts on the old sales would stay at 2 percent. Variable costs are 80 percent of sales, and Geoffrey’s Toy Box has a 15 percent receivables financing cost. Given corporate taxes of 21%, what would the annual incremental after-tax profit be if Geoffrey’s Toy Box extended its credit period?

Problem 4-15 (Effective Rate of Interest)

Which of the following best describes the current ratio? debt ratio operating performance ratio liquidity ratio efficiency ratio

Let’s put it all together in an example: Hermione Corp. has 400,000 shares of common stock outstanding, trading at $52.85 per share. They have 90,000 shares of preferred stock trading at $74.14 per share, and $15,000,000 (face value) in debt, with 8 years to maturity, a 9% coupon, and a YTM of 8%. The firm has a beta of 1.97, the risk-free rate is 2.5% and the expected market return is 12%. Their last preferred dividend was $9.25 per share. Their tax rate is 36%. What is Hermione Corp’s WACC?

Specific step solution,please.