Consider a project with a 4-year life. The initial cost to set up the project is $1,200,000. This amount is to be linearly depreciated to zero over the life of the project. You expect to sell the equipment for $240,000 after 4 years. The project requires an initial investment in net working capital of $120,000, which will be recouped at the end of the project.

You estimated sales of 52,000 units per year at a price of $177 each. The variable cost per unit is estimated to be $141.6 and fixed costs are $240,000 per year.

You expect unit sales, prices, variable and fixed costs to be within 15% of your estimates.

The required return is 13% and the tax rate is 34%.

1. What is the NPV in the base case?

2. What is the NPV in the pessimistic case?

3. What is the NPV in the optimistic case?

3. The expected dividend next year is $1.30 and dividends are expected to grow at 5% forever. What is the value of this promised dividend stream if the discount rate is
a) 8%
b) 5%
c) 3%

Consider a project with a 4-year life. The initial cost to set up the project is $1,200,000. This amount is to be linearly depreciated to zero over the life of the project. You expect to sell the equipment for $240,000 after 4 years. The project requires an initial investment in net working capital of $120,000, which will be recouped at the end of the project.

You estimated sales of 52,000 units per year at a price of $177 each. The variable cost per unit is estimated to be $141.6 and fixed costs are $240,000 per year.

You expect unit sales, prices, variable and fixed costs to be within 15% of your estimates.

The required return is 13% and the tax rate is 34%.

1. What is the NPV in the base case?

2. What is the NPV in the pessimistic case?

3. What is the NPV in the optimistic case?

1. Mr. Ragnor, a 66 year old male, was referred to the department of respiratory diseases at Mount Sighania Hospital with a dry cough accompanied with blood in phlegm over a month. The previous medical history of Mr. Ragnor is uneventful, with the exception of a 40 pack/year history of smoking. Physical examination revealed a rough respiratory murmur in each lung. Laboratory findings were within normal limits, with the exception of prostate special antigen (PSA) at 5.35 ng/ml. Chest CT images revealed an irregular soft-tissue mass with a 9.6 cm maximum diameter, internal uniformity density in the middle-low right lobe close to pulmonary hilum, and a nodular high-density shadow with a 2.5 cm maximum diameter that was a lobulated lesion in the left upper lobe. The patient was positive for metastasis to the mediastinal lymph node. Fiber bronchoscopic biopsy revealed squamous cell carcinoma in the left lobe and SCLC in the right lobe. Additionally, the pharmacogenomic testing revealed mutations in RAS because of which the RAS signaling is ON all the time. Which of the 2 intracellular signaling pathways activated by RAS may promote cell growth and proliferation? Please draw the downstream signaling events involved in the pathways.

Assume that an investor is looking at two​ bonds: Bond A is a 10​-year, 12​% ​(semiannual pay) bond that is priced to yield 13.5 %. Bond B is a 10​-year, 11​% ​(annual pay) bond that is priced to yield 10.5​%. Both bonds carry 5​-year call deferments and call prices​ (in 5 ​years) of ​$1,075.

a. Which bond has the higher current​ yield?

b. Which bond has the higher​ YTM?

c. Which bond has the higher​ YTC?

Foto Company makes 12,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

An outside supplier has offered to sell the company all of these parts it needs for $41.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $52,800 per year.

If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $5.60 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

Required:

a. How much of the unit product cost of $46.30 is relevant in the decision of whether to make or buy the part? (Round "Per Unit" to 2 decimal places.)

b. What is the financial advantage (disadvantage) of purchasing the part rather than making it?

c. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 12,000 units required each year? (Round "Per Unit" to 2 decimal places.)

Suppose the following are national accounts data for a given year for a fictitious country:
$B AUD
Consumption of fixed capital ………………………………………………. 320
Gross private fixed capital formation……………………………………….. 785
Government consumption expenditure………………………………………. 585
Government investment expenditure………………………………………… 210
Imports of goods and services………………………………………………...565
Exports of goods and services………………………………………………...690
Household consumption expenditure………………………………………..3115
Net property and other income paid overseas………………………………….34
Returns to labour…………………………………………………………….2651
Firm profits………………………………………………………………….1687
Other factor rentals……………………………………………………………482
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(f) Calculate Gross National Product (GNP);
(g) Calculate Net National Product (NNP);
(h) Calculate Current Account Balance (CAB);
(i) Calculate Gross National Savings (GNS)

Suppose the following are national accounts data for a given year for a fictitious country:
$B AUD
Consumption of fixed capital ………………………………………………. 320
Gross private fixed capital formation……………………………………….. 785
Government consumption expenditure………………………………………. 585
Government investment expenditure………………………………………… 210
Imports of goods and services………………………………………………...565
Exports of goods and services………………………………………………...690
Household consumption expenditure………………………………………..3115
Net property and other income paid overseas………………………………….34
Returns to labour…………………………………………………………….2651
Firm profits………………………………………………………………….1687
Other factor rentals……………………………………………………………482
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(j) Suppose that tax revenues are $17 billion for the fiscal year, then what is the value of national savings?
(k) If MPCd remains at 0.63 and GDP changes to $4873 billion; then what will the new level of domestic consumption (i.e. Cdf) be?
(l) If exports then increase by $4 billion, private sector investment decreases by $3 billion; and government consumption and investment decrease and increase by $3 billion and $4 billion respectively: by how much will GDP change and what will be its new value?

Consider a project with a 4-year life. The initial cost to set up the project is $1,200,000. This amount is to be linearly depreciated to zero over the life of the project. You expect to sell the equipment for $240,000 after 4 years. The project requires an initial investment in net working capital of $120,000, which will be recouped at the end of the project.

You estimated sales of 77,000 units per year at a price of $137 each. The variable cost per unit is estimated to be $109.6 and fixed costs are $240,000 per year.

You expect unit sales, prices, variable and fixed costs to be within 15% of your estimates.

The required return is 16% and the tax rate is 34%.

The expected return of stock A is 20% per year and the stock's annual standard deviation is 45%. There is also a risk-free asset. When a complete portfolio is formed with a portfolio weight on the risky asset of 35%, the expected return on the complete portfolio is 8.0%.

(a) Compute the risk-free rate of return.

(b) Compute the annual standard deviation of the complete portfolio above

(c) Compute the market price of risk (i.e., the Sharpe ratio)?