##### Your firm is contemplating the purchase of a new $666,000 computer-based order entry system. The system...  Your firm is contemplating the purchase of a new$666,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $64,800 at the end of that time. You will be able to reduce working capital by$90,000 (this is a one-time reduction). The tax rate is 33 percent and your required return on the project is 17 percent and your pretax cost savings are $191,700 per year.  Requirement 1: What is the NPV of this project?$-44,325.31 $-43,411.39$-47,981.01 $-47,067.09$-45,696.20
 Requirement 2: What is the NPV if the pretax cost savings are $266,250 per year?$119,811.66 $110,683.15$117,529.53 $108,401.02$114,106.34

Assume a firm has EBAT of $540,000, and no amortization. It is in a 30 percent tax bracket. a. Compute its cash flow. Cash flow$ b. Assume it has $540,000 in amortization. Recompute its cash flow. Cash flow$ c. How large a cash flow benefit did the amortization provide? Benefit in cash flow $In: Finance ##### (Present value of an uneven stream of payments​) You are given three investment alternatives to analyze.... (Present value of an uneven stream of payments​) You are given three investment alternatives to analyze. The cash flows from these three investments are as​ follows:  Investment End of Year A B C 1 ​$ 3,000 ​$3,000 ​$ 6,000 2 4,000 3,000 6,000 3 5,000 3,000 (6,000) 4 (6,000) 3,000 (6,000) 5 6,000 5,000 16,000

What is the present value of each of these three investments if the appropriate discount rate is

8

​percent?

a.  What is the present value of investment A at an annual discount rate of

8

​percent?

In: Finance

##### Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different... Suppose you held a diversified portfolio consisting of a$7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.31. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 1.35. What would your portfolio's new beta be? Do not round intermediate calculations. Round your answer to two decimal places. In: Finance ##### Your firm decides to increase equity by$1,000,000. Which of the following sets of transactions could...

Your firm decides to increase equity by $1,000,000. Which of the following sets of transactions could NOT be appropriate ledger entries? Increase equity by$1,000,000 and increase long-term assets by $1,000,000 Increase equity by$1,000,000, decrease long-term debt by $500,000, and increase inventory by$500,000

Increase equity by $1,000,000 and increase inventory by$1,000,000

All of these transactions would be appropriate.

In: Finance

##### Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard...

Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.

1. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.

CVx =

CVy =

2. Calculate each stock's required rate of return. Round your answers to two decimal places.

rx =  %

ry =  %

3. Calculate the required return of a portfolio that has $2,000 invested in Stock X and$5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.

rp =  %

In: Finance

##### Roger is conducting a biochemical experiment for the next 12 months. In the first month, the...

Roger is conducting a biochemical experiment for the next 12

months. In the first month, the expenses are estimated to be

$10,000. As the experiment progresses, the expenses are expected to increase by 2 percent each month. Roger plans to pay for the experiment with a government grant, which is received in four monthly installments, starting a month after the experiment completion date. Draw the cash flow diagram for this experiment. Determine the amount of the monthly installment so that the installments received are equal in value to the expenses incurred. Annual nominal interest is 1 0 percent, compounded monthly. In: Finance ##### You purchase 18 call option contracts with a strike price of$100 and a premium of...

You purchase 18 call option contracts with a strike price of $100 and a premium of$2.85. Assume the stock price at expiration is $112.00. a. What is your dollar profit? (Do not round intermediate calculations.) b. What is your dollar profit if the stock price is$97.95? (A negative value should be indicated by a minus sign. Do not round intermediate calculations.)

In: Finance