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Portfolio management: how would you apply what you learned to your own portfolio? Knowing what you know now would you have made a different investment decision?
The applicable discount rate is 14%, the CCA rate is 20% and the tax rate is 35%. Should RBC purchase the new bottling machine?
What if the discount rate is 12%? Will the firm's decision change as the discount rate changes?
Calculate the profitability index for A and B assuming a 22% opportunity cost of capital
What is the initial investment in the product? Remember working capital.
Copernicus Inc. has determined that its target capital structure will be 60% debt, 10% preferred stock, and 30% common stock.
A) What is your estimate of SIVMED’s cost of debt? B) Should flotation costs be included in the component cost of debt calculation? Explain.
What is the present value of the benefit (savings) to refinancing?
a. At what interest rates would you prefer project A to B? Hint: try drawing the NPV profile of each project. b. What is the IRR of each project?
1. What is the initial net investment for the machine (CF0)? 2. What are the net operating cash flows from this project for years 1 –3?
What would be the rate of return from buying the bond today, holding it for one year, and selling it at its new market price?
Calculate the initial investment associated with each alternative.
What are some of the disadvantages of just using the IRR method for evaluating a capital project?
What are some differences between IRR and PI and NPV? Why would an organization choose to lease an asset instead of buying it?
Calculate for the Strident Marks CFO, key financial metrics for this capital budgeting project.
Describe what these metrics mean (interpret the reuslts). Why are these important?
Also, what steps you would take to help this company using capital budgeting, derivatives and other financial tools?
Compute expected return and standard deviation of annual return for each alternative separately.
What are some differences between IRR and PI? What would Lisa Cross say about IRR?
Please explain the relevance and importance of the capital budgeting process.
How can organizations increase the accuracy of the budgeting process?
a-What is the book value of the old equipment? b-What is the tax loss on the sale of the old equipment.
The firm has a 36% tax rate and a 9% cost of capital. Should the new equipment be purchased to replace th old equipment?
Discuss the limitations of financial leverage. Compute the break-even point in units.
NPV versus IRR. Here are the cash flows for two mutually exclusive projects: