Caspian Sea Drinks is considering the purchase of a plum juicer – the PJX5. There is no planned increase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the IRR of the PJX5?

a. The PJX5 will cost $1.87 million fully installed and has a 10 year life. It will be depreciated to a book value of $166,564.00 and sold for that amount in year 10.

b. The Engineering Department spent $46,567.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,852.00.

d. The PJX5 will reduce operating costs by $467,000.00 per year.

e. CSD’s marginal tax rate is 25.00%.

f. CSD is 63.00% equity-financed.

g. CSD’s 14.00-year, semi-annual pay, 6.87% coupon bond sells for $955.00.

h. CSD’s stock currently has a market value of $24.33 and Mr. Bensen believes the market estimates that dividends will grow at 2.24% forever. Next year’s dividend is projected to be $1.55.

Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))

I really need help with this one! would greatly appreciate it!

A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,649.00 to install, $5,074.00 to operate per year for 7 years at which time it will be sold for $6,863.00. The second, RayCool 8, costs $41,963.00 to install, $2,147.00 to operate per year for 5 years at which time it will be sold for $8,950.00. The firm’s cost of capital is 6.41%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.

Answer format: Currency: Round to: 2 decimal places.

Question 4 (25 marks/Investment Decision Rules)

Suppose your firm would like to earn 10% yearly return from the following two investment projects of equal risk.

(a)       If only one project can be accepted, based on the NPV method which one should it be? Support your answer with calculations.                                                          

(b)       Suppose there is another four-year project (Project C) and its cash flows are as follows:

C₀ = –$8,000

             C₁ =   $2,000

               C₂ =   $2,500

               C₃ =   $2,000

               C₄ =   $4,000

(i)     Given the above cash flow patterns, at what required rate of return will Project C have the same NPV as Project B? Briefly explain your answer.                          

(ii)    If Project C has the same risk as Project B, without calculations, explain which project will you pick?                                                                                          

(iii)   If cash flow C₄ of Project C is unknown to you (while C₀ – C₃ are known and as above) and the project’s cost of capital is 10%, what amount of C₄ will make Project C worth accepting?                                                                                        

(iv)   If your firm’s investment policy (based on payback method) is such that it only accepts projects whose initial investment can be recouped within three years, will Project B and/or Project C be accepted?

(c)Based on the estimated cash flows of Project A, will you expect its internal rate of return (IRR) to be positive? Briefly explain your answer WITHOUT calculations. (4marks)

(d) What kind of rate of return is the 10% interest stated in the question for Projects A and B? How can it be used in making investment decisions (i.e. its role in investment decision making)?  

Please write a well researched study. 3 paragraphs. Thank you!

What are some of the challenges -especially those relating to global financial markets -facing both the CFO of GE and top management at the Federal Reserve?

A retail shopping center is purchased for $2.1 million. During the next five years, the property appreciates at 2 percent per year. At the time of purchase, the property is financed with a 70 percent loan-to-value ratio for 25 years at 6 percent (annual) with monthly amortization. At the end of year 5, the property is sold with 4 percent selling expenses. What is the before-tax equity reversion?

Question 18 options:

The price of Stock A today is 50, and stock B is 100. The probability of a booming, normal, and recessionary economy are 0.2, 0.7, and 0.1 respectively. If the economy is booming, stock’s A price will be 65 and stock B will be 108. If the economy is normal, stock’s A price will be 55 and stock’s B will be 105. If the econ falls into recession, stock’s A price will be 40 and stock’s B will be 102.
a) Calculate the expected return and standard deviation for each stock.
b) Assume you create a portfolio and put 50% of you money in stock A and 50% of you money in stock B. Calculate the portfolio expected return and standard deviation.

Please show formula and steps

Assume that a stock’s price was $150 in 2014, $200 in 2015, $240 in 2016, $210 in 2017, and $280 in 2018. Find the following:
a) The return of the stock in each year
b) The (arithmetic) average of returns
c) The geometric average of returns
d) The variance and standard deviation of returns

Please show formula and steps

Kurz Manufacturing is currently an​ all-equity firm with 21 million shares outstanding and a stock price of $9.00 per share. Although investors currently expect Kurz to remain an​ all-equity firm, Kurz plans to announce that it will borrow $55 million and use the funds to repurchase shares. Kurz will pay interest only on this​ debt, and it has no further plans to increase or decrease the amount of debt. Kurz is subject to a 35% corporate tax rate.

a. What is the market value of​ Kurz's existing assets before the​ announcement?

b. What is the market value of​ Kurz's assets​ (including any tax​ shields) just after the debt is​ issued, but before the shares are​ repurchased?

c. What is​ Kurz's share price just before the share​ repurchase? How many shares will Kurz​ repurchase?

d. What are​ Kurz's market value balance sheet and share price after the share​ repurchase?

a. What is the market value of​ Kurz's existing assets before the​ announcement?

The market value of​ Kurz's existing assets before the announcement is

​$

million. ​ (Round to one decimal​ place.)

b. What is the market value of​ Kurz's assets​ (including any tax​ shields) just after the debt is​ issued, but before the shares are​ repurchased?

The

market value of​ Kurz's assets​ (including any tax​ shields) just after the debt is​ issued, but before the shares are​ repurchased, is

​$

million.  ​(Round to one decimal​ place.)

c. What is​ Kurz's share price just before the share​ repurchase? How many shares will Kurz​ repurchase?

​Kurz's share price just before the share repurchase is

​$.

  ​(Round to two decimal​ places.)                                  Shares to be repurchased are

million.  ​(Round to three decimal​ places.)

d. What are​ Kurz's market value balance sheet and share price after the share​ repurchase?

Market value of assets after share repurchase is

​

million. ​ (Round to one decimal​ place.)Debt after share repurchase is

​

million. ​(Round to the nearest​ million.)Market value of equity after share repurchase is

​$

million. ​ (Round to one decimal​ place.)Share price after repurchase is

​$.

​(Round to two decimal​ places.)

What is the firm's total change in cash from the prior year to the current year?

Capital Budgeting Theoretical Framework.

Capital budgeting for a foreign project uses the same theoretical framework as domestic capital budgeting. What are the basic steps in domestic capital​ budgeting?

Foreign Exchange Risk and Capital Budgeting.

How is foreign exchange risk sensitivity factored into the capital budgeting analysis of a foreign​ project?

9.Just recently having accepted a full time position at your dream job, you go in search of a new car. You found one you like a lot and you consider a three-year lease. It will cost you $360 per month, plus an additional $15,000 at the end of the lease if you want to purchase it. If (1) your opportunity cost of money is about an APR of 7.0%, and (2) you intend to purchase the car after the lease, what will be the total investment you will have made in the car when the lease is up and you purchase it?

A. about $26,337

B. about $29,380

C. about $15,000

1. Coleman Technologies is considering a major expansion program that has been proposed by the company’s information technology group. Before proceeding with the expansion, the company must estimate its cost of capital. Assume that you are an assistant to Jerry Lehman, the financial vice president. Your first task is to estimate Coleman’s cost of capital. Lehman has provided you with the following data, which he believes may be relevant to your task. Answer the following questions and SHOW YOUR CALCULATIONS. The firm’s tax rate is 28%.

A) The current price of Coleman’s 14% coupon rate, with annual payments, non-callable bonds with 15 years remaining to maturity is $1,153.72. Coleman does not use short-term interest-bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost. What is the firm’s after-tax cost of new debt, if issued today?

B) The current price of the firm’s preferred stock is $111.10, and the dividend is $10. What is the cost of preferred stock today, based on outstanding stock (and no flotation costs)?

C) Coleman’s common stock is currently selling for $50 per share. Its last dividend (D0) was $4.19, and dividends are expected to grow at a constant rate of 5% in the foreseeable future. There are no flotation costs. What is the new cost of common equity today?

D) Coleman’s target capital structure is 30% debt, 10% preferred stock, and 60% common equity. What is Coleman’s overall, or weighted average, cost of capital (WACC)? Include stock flotation costs for common equity.