A person purchases a company for $50,000 now. This company will lose $2,200 each year the first four years. At the end of the fourth year, he/she will invest additional $16,000 in the company which will result in a profit of $11,000 each year from the fifth year through the fourteenth year. At the end of 15 years, the company can be sold for $66,000. Compounding is annual. (a) Determine the IRR. (b) Calculate the future worth if MARR = 12%. (c) Calculate the ERR when = 10%.

Ward Corp. is expected to have an EBIT of $2,700,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $181,000, $117,000, and $131,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $21,000,000 in debt and 810,000 shares outstanding. At Year 5, you believe that the company's sales will be $17,500,000 and the appropriate price–sales ratio is 2.7. The company’s WACC is 9.4 percent and the tax rate is 40 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price $

Consider a project with free cash flows in one year of $ 133 comma 513 in a weak market or $ 194 comma 564 in a strong​ market, with each outcome being equally likely. The initial investment required for the project is $ 85,000​, and the​ project's unlevered cost of capital is 16 %. The​ risk-free interest rate is 12 %. ​(Assume no taxes or distress​ costs.)

a. What is the NPV of this​ project?

b. Suppose that to raise the funds for the initial​ investment, the project is sold to investors as an​ all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this waylong dashthat ​is, what is the initial market value of the unlevered​ equity?  

c. Suppose the initial $ 85 comma 000 is instead raised by borrowing at the​ risk-free interest rate. What are the cash flows of the levered equity in a weak market and a strong market at the end of year​ 1, and what is its initial market value of the levered equity according to​ MM?  Assume that the​ risk-free rate remains at its current level and ignore any arbitrage opportunity.

a. What is the NPV of this​ project? The NPV is ​$ 56413. ​(Round to the nearest​ dollar.)

b. Suppose that to raise the funds for the initial​ investment, the project is sold to investors as an​ all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this waylong dashthat ​is, what is the initial market value of the unlevered​ equity?  

You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 7.8 percent coupon bonds are selling at a price of $1,052.38. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions.

What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.)

What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)

Assume that it is 2008. You purchased CSH stock for ​$33 one year ago and it is now selling for ​$44. The company has announced that it plans a ​$11 special dividend. You are considering whether to sell the stock​ now or wait to receive the dividend and then sell.

a. Assuming 2008 tax​ rates, what​ ex-dividend price of CSH will make you indifferent between selling now and​ waiting?

b. Suppose the capital gains tax rate is 20 % and the dividend tax rate is 38 %​, what​ ex-dividend price would make you indifferent​ now?

a. Assuming 2008 tax​ rates, what​ ex-dividend price of CSH will make you indifferent between selling now and​ waiting?  

In​ 2008, the capital gains tax rate is 15 % and the dividend tax rate is 15 %. The tax on a ​$11 capital gain is ​$​     , and the tax on a ​$11 special dividend is ​$     . The​ after-tax income for both will be ​$    . ​(Round to the nearest​ cent.)

Victor is spending HKD300,000 per year and is quite satisfied with the present living lifestyle and standard. He is now 38 and plans to retire at age 60. He believes he can live up to age 85. He wants to keep 80% of the current living lifestyle and standard after retirement. Victor would like all the money for retirement to be ready when he retires. He also would like the retirement money for spending in a year to be ready at the beginning of every year. He plans to start saving for the retirement reserve with an equity unit trust fund of 10% annual rate of return. Average expected annual rate of return during his retirement period is 6%. Assume the average long term inflation is 4% p.a.

a. What is the required annual expenditure at the time when Victor retires at age 60?

b. What is the total amount of money required for 25 years after Victor’s retirement? (at the beginning of age 60)

c. How much should Victor save at the beginning of each month from now on until the age of 60 in order to meet the required amount at (c)?

Question 20. Consider a 2-year bond. The coupon rate of the bond is 10%, and the bond pays coupons semiannually. The bond is selling at a yield to maturity of 8.0% annually, or 4.0% semi-annually.

a. What is the duration of the bond? (12 points)

b. If the semi-annually yield changes from 4.0% to 5.0%, what is the predicted change in the price of the bond using duration? (8 points)

Periodic Inventory by Three Methods

The units of an item available for sale during the year were as follows:

There are 1,220 units of the item in the physical inventory at December 31. The periodic inventory system is used.

a. Determine the inventory cost by the first-in, first-out method.
$fill in the blank 1

b. Determine the inventory cost by the last-in, first-out method.
$fill in the blank 2

c. Determine the inventory cost by the weighted average cost method. Do not round intermediate calculation and round final answer to the nearest whole dollar.
$fill in the blank 3

2. To create a portfolio with a duration of 4 years using a 5 year zero coupon bond and a 2 year 6% annual coupon bond with a yield to maturity of 8%, one would have to invest______ of the portfolio value in the zero coupon bond.