One of the big Coffee chain is planning to open a new store in New York

Opening a new store - Whether to go ahead or not. Below are some details

Cost of Capital = 6.15%

Current Stores - 27000

Set up Costs: The cost of setting up a new store is $5 million right now, and this cost is expected to grow at the inflation rate in future years. The cost is depreciable, straight line, over 10 years down to a salvage value, which is 30% of the initial investment.

Note: Cash flow from investing & Financing activities are ignored

Cash flow from operations for 27000 stores = 4.174 Billion

Revenue Estimate in millions from new store opening

G&A allocation will be 5% of the revenues each year

operating expenses are assumed to be 30% of the revenues

¨The income from the investment will be taxed at marginal tax rate of 32%.

Calculate the Return on Capital (ROC) and Return on Invested Capital (ROIC) for the New Store

Estimate Accounting Earnings on Project

Managers of CVS Pharmacy are considering a new project. This project would be a new store in Odessa, Texas. They estimate the following expected net cash flows if the project is adopted.

Year 0: ($1,250,000)

Year 1: $200,000

Year 2: $500,000

Year 3: $400,000

Year 4: $300,000

Year 5: $200,000

Suppose that the appropriate discount rate for this project is 5.2%, compounded annually.

Calculate the net present value for this proposed project.

Do not round at intermediate steps in your calculation. Round your answer to the nearest dollar. If the NPV is negative, include a minus sign. Do not type the $ symbol.

Compare and contrast new debt offerings to new offerings of equity in the form of stock. Specifically, be sure to comment on the direct and indirect costs of new public debt versus new public equity.

1. Suppose a new company is interested in promoting their new diet management program. The concept is similar to weight watchers and involves an overall reduction of daily calorie intake. Before making a more direct effort at promoting the success of their program, the company wants to get an idea of how effective their program is based on a SRS. Assume the following table represents results pre and post intervention of 5 individuals varying approximately to a normal distribution.

A) What type of t-test would you use here?

B) Carry out an appropriate t test investigating the effectiveness of the new weight loss intervention at reducing overall calorie intake with alpha=.05. Be sure to include each of the four steps of hypothesis testing. Do not use excel or graphing calculator.

New Home Prices: If the average price of a new one-family home is $250,000 with a standard deviation of $15,000, find the minimum and maximum prices of the houses that a contractor will build to satisfy the middle 80% of the market?

A newly built casino is introducing a new gamble. Since this game is extremely new, the casino is offering a free play to everyone (no money or chips needed to gamble) so that all players get a sense of this new game. The game is played with the following rules

There are 3 decks of 20 cards each on the table:
• Deck A contains 20 red cards numbered 1–20.
• Deck B contains 10 red cards numbered 21–30 and 10 blue cards.
• Deck C contains 5 red cards numbered 31–35 and 15 blue cards.
Each of the 3 decks is shuffled, and 1 card is drawn from each deck. These 3 cards are shuffled and put
face down on the table, making a new pile of 3 cards. Let R be the number of red cards among these 3
cards.
a. Compute the expected value and the variance of R.

Parts b–d describe three different ways in which you could learn that the pile of 3 cards formed above
(with 1 card from each of the 3 decks) has 2 red cards. In each case, determine the probability that
the third card in the pile is also red. Note that these three parts are all independent—for example, the
information given in part b does not carry over to parts c or d.

b. The 3 cards in the new pile are turned over one at a time. The first card is the red 32, and the
second card is the red 5. What is the probability that the third card in the pile is also red?
c. The 3 cards in the new pile are turned over one at a time, but you only see the color on each card
(not the number). The first two cards flipped over are red. What is the probability that the third
card in the pile is also red?
d. You ask a friend to look at the 3 cards in the pile without showing you the cards. You ask them,
“Are there at least 2 red cards in the pile?” They confirm that yes, there are at least 2 reds in the
pile. What is the probability that all 3 cards are red?

1. Suppose a new company is interested in promoting their new diet management program. The concept is similar to weight watchers and involves an overall reduction of daily calorie intake. Before making a more direct effort at promoting the success of their program, the company wants to get an idea of how effective their program is based on a SRS. Assume the following table represents results pre and post intervention of 5 individuals varying approximately to a normal distribution.

A) What type of t-test would you use here?

B) Carry out an appropriate t test investigating the effectiveness of the new weight loss intervention at reducing overall calorie intake with alpha=.05. Be sure to include each of the four steps of hypothesis testing.

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $333,588 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,760,000. The cost of the machine will decline by $110,000 per year until it reaches $1,320,000, where it will remain. The required return is 14%.

What is the NPV if the company purchases the machine today? (Round answer to 2 decimal places. Do not round intermediate calculations)

Blossom Corp. is investing in a new computer system. The new system costs $1,250,000 in the current year, but will generate an annual cash inflow of $350,000 for the next six years. Assuming the company’s cost of capital is 12%, the discounted payback period of this project is closest to _______.

Group of answer choices

a. 4 years

b. 3 years

c. 5 years

d. 6 years