(Calculating free cash flows​) At​ present, Solartech Skateboards is considering expanding its product line to include​ gas-powered skateboards;​ however, it is questionable how well they will be received by skateboarders. Although you feel there is a 70 percent chance you will sell 9,000 of these per year for 10 years​ (after which time this project is expected to shut down because​ solar-powered skateboards will become more​ popular), you also recognize that there is a 15 percent chance that you will only sell 4,000 and also a 15 percent chance you will sell 16,000. The gas skateboards would sell for $ 140 each and have a variable cost of ​$50 each. Regardless of how many you​ sell, the annual fixed costs associated with production would be ​$120,000. In​ addition, there would be an initial expenditure of ​$800,000 associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the simplified​ straight-line method down to zero over 10 years. Because of the number of stores that will need​ inventory, the working capital requirements are the same regardless of the level of sales. This project will require a​ one-time initial investment of $ 70,000 in net working​ capital, and that​ working-capital investment will be recovered when the project is shut down.​ Finally, assume that the​ firm's marginal tax rate is 35 percent.

a. What is the initial outlay associated with the​ project?

b. What are the annual free cash flows associated with the project for years 1 through 9 under each sales​ forecast? What are the expected annual free cash flows for years 1 through​ 9?

c. What is the terminal cash flow in year 10​ (that is, what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the​ project)?

d. Using the expected free cash​ flows, what is the​ project's NPV given a required rate of return of 9 ​percent? What would the​ project's NPV be if 9,000 skateboards were​ sold?

​(Replacement chains​) Destination Hotels currently owns an older hotel on the best beachfront property on Hilton Head​ Island, and it is considering either remodeling the hotel or tearing it down and building a new convention​ hotel, but because both hotels would occupy the same physical​ location, the company can only choose one project-that ​is, these are mutually exclusive projects. Both of these projects have the same initial outlay of $ 1,800,000. The first​ project, since it is a remodel of an existing​ hotel, has an expected life of 9 years and will provide free cash flows of $ 400,000 at the end of each year for all 9 years. In​ addition, this project can be repeated at the end of 9 years at the same cost and with the same set of future cash flows. The proposed new convention hotel has an expected life of 18 years and will produce cash flows of $ 280,000 per year. The required rate of return on both of these projects is 9 percent. Calculate the NPV using replacement chains to compare these two projects.

(Calculating free cash flows​) You are considering new elliptical trainers and you feel you can sell 6,000 of these per year for 5 years​ (after which time this project is expected to shut down when it is learned that being fit is​ unhealthy). The elliptical trainers would sell for ​$1,000 each and have a variable cost of ​$500 each. The annual fixed costs associated with production would be ​$1,500,000. In​ addition, there would be a ​$6,000,000 initial expenditure associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the simplified​ straight-line method down to zero over 5 years. This project will also require a​ one-time initial investment of ​$1,100,000 in net working capital associated with​ inventory, and that working capital investment will be recovered when the project is shut down.​ Finally, assume that the​ firm's marginal tax rate is 34 percent.

a. What is the initial outlay associated with this​ project?

b. What are the annual free cash flows associated with this project for years 1 through​ 4?

c. What is the terminal cash flow in year 5 ​(that is, what is the free cash flow in year 5 plus any additional cash flows associated with the termination of the​ project)?

d. What is the ​project's NPV given a required rate of return of 9 ​percent?

Sully contributed $750,000 to an irrevocable trust. He did not retain any right to the trust’s assets. The income beneficiary was Sully's sister, Kate, and the remainder beneficiary was a University. When Sully died four years later, the value of the trust was $1,500,000. How much will be included in Sully's gross estate?

Assume you are given these mutually exclusive investments with the expected net cash flows as in the table:

Respond to the questions:

Question 1:

• What is each project’s IRR?
• If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice?

Question 2:

What is each project’s MIRR at the cost of capital of 10%? At 17%?

(Hint: Consider Period 7 as the end of Project B’s life.)

Question 3:

What is the crossover rate, and what is its significance?

A​ bond's market price is ​$1 comma 150. It has a ​$1 comma 000 par​ value, will mature in 8 ​years, and has a coupon interest rate of 9 percent annual​ interest, but makes its interest payments semiannually. What is the​ bond's yield to​ maturity? What happens to the​ bond's yield to maturity if the bond matures in 16 ​years? What if it matures in 4 ​years? a.  The​ bond's yield to maturity if it matures in 8 years is nothing​%. ​ (Round to two decimal​ places.)

value investing, and growth investing. Intrinsic investing . moat analysis with pnc Bank I am writing a five page paper on intrinsic Value and how to view a company's worth for investing in the stock market

A rancher is considering the purchase of additional land to expand operations. He can operate an additional 1000 acres with present labor and machinery. The land is selling for $750 per acre. This rancher believes that the operating revenue per acre of land will be $550 and operating expenses will be $450 in present dollars. He expects the inflation rate will be 3%. The rancher will sell the land in 3 years and he anticipates that land prices will increase at the rate of inflation from the base of $750 per acre. A bank will loan him $600 per acre of land and the loan will be fully amortized over 15 years at 12% (annual payments). The outstanding balance of the loan will be paid at the end of the third year. Assume that the marginal tax rate is 15% and that he requires at least an 8% pre-tax, risk-free return on capital and a 2% risk premium on projects of comparable risk.

(i) Calculate the nominal after-tax net returns at the end of year 2.

            a. $78.30                                                         b. $84.52

           c. $90.18                                                       d. None of the answers are correct

Enter Response Here:

(ii) What is the present value of the nominal after tax net return after 3 years?

            a. $258.10                                                      b. $213.27

            c. $230.01                                                     d. None of the answers are correct

Enter Response Here:

(iii) What is present value of the after-tax terminal value after 3 years?

            a. $612.38                                                      b. $628.66

            c. $633.46                                                     d. None of the answers are correct

Enter Response Here:

(iv) What is the net present value?

            a. $134.89                                                      b. $97.22

            c. $113.47                                                     d. None of the answers are correct

THE ANSWERS WILL NOT BE "NONE OF THE ANSWERS ARE CORRECT"

If an asset costs $240,000 and is expected to have a $40,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $40,000 each year, the cash payback period is

 For the project shown in the following​ table,

LOADING...

​,

calculate the internal rate of return

​(IRR).

Then​ indicate, for the​ project, the maximum cost of capital that the firm could have and still find the IRR acceptable.

The​ project's IRR is __ %

​(Round to two decimal​ places.)

The John Deer Company is evaluating the replacement of one of its machines. The machine was originally purchased ten years ago at a cost of $35,000 and has been depreciated to a book value of zero. If Pioneer replaces the machine, it will be able to bid on larger projects that require the capabilities of the new machine. The new machine will cost the firm $80,000, which will be depreciated over 4 years according to the following depreciation rates: 40% in each of years 1 and 2, and 10% in each of years 3 and 4. The new machine qualifies for an immediate 2% investment tax credit. Pioneer anticipates that at the end of the machine’s eight year economic life it will be sold for $10,000. Pioneer estimates that its existing machine can be sold today for $5,000. If John Deer does not replace the machine, it anticipates being able to use the existing machine for eight more years at which time its salvage value would be zero. Without the purchase of the new machine, John Deer expects to generate revenue of $200,000 per year. The firm’s use of its existing machine is expected to generate operating expenses of $120,000 per year. If the new machine is purchased, Pioneer expects the firm’s annual revenues and operating costs to increase to $270,000 and $170,000 respectively. John Deer's marginal tax rate is 40%. To finance this project, Pioneer will raise 30% of the capital from debt and 70% of the capital from equity; its after-tax cost of debt is 8% and the cost of equity is 18%. a. Calculate the NPV for this project. b. Calculate the IRR for this project; you should use Excel to do this. Calculate the IRR to 2 decimals; for example, 25.63%.

FCOJ, Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure to one that is 20 percent debt. Currently, there are 12,000 shares outstanding, and the price per share is $87. EBIT is expected to remain at $25,200 per year forever. The interest rate on new debt is 8 percent, and there are no taxes. a. Allison, a shareholder of the firm, owns 250 shares of stock. What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will Allison’s cash flow be under the proposed capital structure of the firm? Assume she keeps all 250 of her shares. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Assume that Allison unlevers her shares and re-creates the original capital structure. What is her cash flow now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%.

What is Project Delta's IRR? Do not round intermediate calculations. Round your answer to two decimal places.

%

A mining company is considering a new project. Because the mine has received a permit, the project would be legal; but it would cause significant harm to a nearby river. The firm could spend an additional $10 million at Year 0 to mitigate the environmental Problem, but it would not be required to do so. Developing the mine (without mitigation) would cost $60 million, and the expected cash inflows would be $20 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $21 million. The risk-adjusted WACC is 12%.

1. Calculate the NPV and IRR with mitigation. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55.
   NPV $ million ????
   IRR 15.24%