required rate of return = 15%

year

using excel, draw npv profile and find "two" IRRs.

There should be two IRRs. If you get two IRRs, the NPV profile graph should look like a parabola curve.

I figured out the first IRR which is 19% (19.45...% to be exact) but I can't seem to get the second one.

Mr. C is a 22 year old, white, single, male who is in his third year at a local university in Albuquerque, New Mexico. He is majoring in Philosophy and American studies. When he is not in school he lives with his parents.

He has been taken to the mental health center for an evaluation today, brought by his parents who were concerned after he was demonstrating “strange” behaviors and then abruptly dropped out of school after he failed his summer class. This baffled the parents since he has always been an A and B student. Up until three months ago he seemed to be doing okay. He was living in the dorms and there were no reports he was doing poorly. When asked why he dropped out of school, he stated the administration of the school was watching and targeting him for being a suspected spy for another university.

He stated the professor of his philosophy class warned him of this in a coded message on one of his powerpoints. None of the other students noticed this, but the message was clear to him. He also verbalized he could hear the students laugh at him behind his back. Additionally, he began hearing two voices, which he did not recognize. These voices would comment on his behavior and criticize his actions. They were telling him to drop out of school because if he didn’t the administration was going to make a public spectacle of him.

He stated he smoked a little bit of pot when he was in high school, but didn’t like it because it made him feel weird. He also didn’t like the taste of alcohol. He grew up in an upper middle class environment. His mother is an attorney working in real estate law and his father is a professor in the English department of another university in New Mexico. They stated he has always been very intelligent and always a little shy, but not overly so. He spent a lot of time alone, but his parents didn’t consider him to be a “loner” since he occasionally had one or two friends. He didn’t like to go to parties or places where there were large gatherings. The parents did not see this as odd and were glad he was keeping away from trouble. He joined a couple of youth groups in his adolescence which were tied to his church, but dropped out after he felt they were pressuring him to change his beliefs.

When the social worker entered the room to begin the evaluation, Mr. C asked her if she worked for the administration and asked to see her credentials. He was disheveled in appearance, wearing a dirty wrinkled shirt--which was different from his past habits, according to the parents. He always prided himself on being clean and neat. He was slightly agitated and during the interview got up from his chair several times. His thinking, at times, was tangential with some loosening of associations. He denied any suicidal or homicidal ideation. His only previous psychiatric history was outpatient treatment he attended with his family in a family therapy session. This occurred when he was around 15 y.o. when his parents were thinking of getting a divorce. The parents did not divorce and have remained together. The father did state one of his brothers was hospitalized for psychiatric reasons in Colorado several years ago, and didn’t know the circumstances.

Based on the above vignette for Case #1, list the principal diagnosis/diagnoses (including any and all appropriate subtypes and specifiers)

An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $7,200,000 and will be sold for $1,620,000 at the end of the project.

A) What is the book value of the equipment at the end of Year 4?

B) If the tax rate is 24 percent, what is the aftertax salvage value of the asset?

required rate of return = 15%

year

1. make a spreadsheet using excel to calculate irr, mirr, npv,

2. using excel, draw npv profile and find "two" IRRs.

3. based on the analysis, should you take on this project?

Colsen Communications is trying to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:

The company has a 40% tax rate, and its WACC is 13%.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

1. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.
   $  
2. 
   
3. If this project would cannibalize other projects by $0.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.
   The firm's OCF would now be $  
4. 
   
5. Ignore Part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest dollar.
   The firm's operating cash flow would -Select-increase/decrease by $  

Colsen Communications is trying to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:

The company has a 40% tax rate, and its WACC is 10%.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

1. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.
   $  
2. 
   
3. If this project would cannibalize other projects by $0.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.
   The firm's OCF would now be $ _______
4. 
   
5. Ignore Part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest dollar.
   Would the firm's operating cash flow increase or decrease by $ ________

Suppose that Ramos contributes $5500/year into a traditional IRA earning interest at the rate of 5%/year compounded annually, every year after age 37 until his retirement at age 67. At the same time, his wife Vanessa deposits $3850/year (the amount after paying taxes at the rate of 30%) into a Roth IRA earning interest at the same rate as that of Ramos. Suppose that Ramos withdraws his investment upon retirement at age 67 and that his investment is then taxed at 30%. (Round your answers to the nearest cent.)

(a)How much will Ramos's investment be worth (after taxes) at that time?

(b)How much will Vanessa's investment be worth at that time?

The yield on 1 year treasury securities is 7.25%, 2 year securities yield 7.3%, and 3 year securities yield 7.5%. There is no maturity risk premium. Using expectations theory, forecast the yields on the following securities:

(a) A 1-year security, 1 year from now

(b) A 1-year security, 2 years from now

(c) A 2-year security, 1 year from now

An asset used in a 4-year project falls in the 5-year MACRS class (refer to MACRS table on page 277), for tax purposes. The asset has an acquisition cost of $15,535,460 and will be sold for $5,328,631 at the end of the project. If the tax rate is 0.39, what is the aftertax salvage value of the asset (SVNOT)?