a) RNXD Inc. has the opportunity to market a product for 5 years under a specialty...

a) RNXD Inc. has the opportunity to market a product for 5 years under a specialty contract. The product will provide the company with net cash flows of $40,000. The investment calls for an initial working capital investment $280,000. The investment also calls for the purchase of equipment for $200,000. The machinery will have a salvage value of $45,000 at the end of the contract. RNXD Inc. is subject to a 16% discount rate. The net present value of this investment opportunity is?

b) A local machine shop purchased a new milling machine yesterday for $75,180 which is expected to generate annual cash savings of $12,000 for the next sixteen years after which the machine will have no salvage value. What is the machine’s internal rate of return?

c) RNX Inc. purchased a machine for $40,000 which will save the company approximately $16,000 in even cash flows per year. What is the machine's payback period?

Expert Solution

ekkarill92 answered 2 years ago

5. Market Equilibrium: Bingo Inc. has a beta of 0.8, a market price of $30, and...

5. Market Equilibrium: Bingo Inc. has a beta of 0.8, a market price of $30, and recently paid a dividend of $2.00 which is expected to grow at a constant rate of 3%. The risk-free rate is 2% and the market risk premium is 6%. a. Compute the required rate of return on Bingo stock. b. Compute the expected return on Bingo stock. c. Compute the dividend yield and capital gains yield for Bingo’s stock. d. Is Bingo’s stock in...

Potter Corporation has gained considerable market share in recent years for its? specialty, low-volume, complex line...

Potter Corporation has gained considerable market share in recent years for its? specialty, low-volume, complex line of? products, but the gain has been offset by a loss in market share for its? high-volume, simple line of products. This has resulted in a net decline in its overall profitability. Requirement Advise management about specific changes that may be required in its cost accounting system and explain why the existing system may be inadequate. Potter Corporation should 1. Keep its current costing...

Question 5 [20 marks] Foursome Inc. is the monopolist in the four-toe socks market. The product...

Question 5 [20 marks] Foursome Inc. is the monopolist in the four-toe socks market. The product does not sell very well, but some people buy it as a present for their in-laws. In particular, the market demand is given by P = 24 − Q where P and Q are the market price and quantity of four-toe socks, respectively. The cost function of producing q units is given by the cost function c(q) = 5q^2 . Foursome Inc. practises simple...

Flash Inc. was founded 5 years ago. It has been profitable for the last 2 years,...

Flash Inc. was founded 5 years ago. It has been profitable for the last 2 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $1 dividend starting one year from today, then it will increase the dividend growth by 50% for the next two years, and then the company will achieve a long run growth rate of 6%. Assuming a required...

Grills, Inc. makes a single product - a handmade specialty barbeque grill that sells for $700....

Grills, Inc. makes a single product - a handmade specialty barbeque grill that sells for $700. Data for last year’s operations follow: Units in beginning inventory 0 Units produced 50,000 Units sold 40,000 Variable costs per unit: Direct materials $ 200 Direct labor 100 Variable manufacturing overhead 70 Variable selling and administrative 30 Total variable cost per unit $ 400 Fixed costs: Fixed manufacturing...

5 Jeanlouis, Inc., manufactures and sells two products: Product D0 and Product D5. The company has...

5 Jeanlouis, Inc., manufactures and sells two products: Product D0 and Product D5. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product D0 Product D5 Total Labor-related DLHs $313,743 3,600 3,300 6,900 Production orders orders 70,264 300 500 800 General factory MHs 253,555 4,300 4,200 8,500 $637,562 The total overhead applied to Product D5 under activity-based costing is closest to:...

ABC Inc. has bonds on the market with 15 years to maturity, a YTM of 7%...

ABC Inc. has bonds on the market with 15 years to maturity, a YTM of 7% and a current price of $950. The bond makes semiannual payments. What must the coupon rate be on these bonds?

What is Zaggora’s main product and target market? Does this represent a good opportunity? Why or...

What is Zaggora’s main product and target market? Does this represent a good opportunity? Why or why not? Hint: Construct a Venture Opportunity Screener.

Bourdon Software has 5 percent coupon bonds on the market with 17 years to maturity. The...

Bourdon Software has 5 percent coupon bonds on the market with 17 years to maturity. The bonds make semiannual payments and currently sell for 96 percent of par. What is the effective annual yield? (Enter your answer as a percentage, omit the "%" sign in your response, and enter your answer with two decimal places. For example, 1.214% should be entered as 1.21.)

Digital Empire has 5 percent coupon bonds on the market with 15 years to maturity, and...

Digital Empire has 5 percent coupon bonds on the market with 15 years to maturity, and the par value of $1,000. At what price should the bonds be selling for if YTM is 7%? (note: coupons are paid semi-annually) Had the bond been selling at $1,022.50, what would be the YTM (assuming the same coupon, maturity and par value)? Based on your answers above, what is the relationship between YTM and bond price

Question