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Ignoring possible taxes on the sale of used equipment and assuming zero salvage values at the end of the roasters' economic lives, should Caffe Vita replace.
If Auger engages in a promotional campaign costing $60 million this year, its annual after-tax cash flow over the next five years will be only $700,000.
Using the same risk-adjusted discount rate to discount all future cash flows ignores the fact that the more distant cash flows are often riskier.
Comparable numbers of Stock B are 34 percent and 0.94. Which stock is riskier? Why?
What is the lowest rate of return the entrepreneur should be willing to accept on purchase of the business? Why?
What logical arguments would you use to convince your boss to forego the project despite its high rate of return?
Propose an investment-financing package that meets the investor's target when she demands a 90 percent return on equity.
A security analyst has regressed the monthly returns on Berkshire Hathaway equity shares over the past five years against those on the Standard & Poor.
Ignoring taxes, estimate the rate of return to the buyout firm on the acquisition after debt-service.
Using a tax rate of 34 percent, estimate the minimum price the owner of the division should consider for its sale.
Estimate the per share value of Flatbush's stock immediately prior to the president's proposal.
Suppose a company's free cash flows were expected to be negative in all future periods. Can you conceive of any reasons for buying the company's stock?
If the company has 1.6 million shares outstanding prior to the purchase, what is the company's pre-money value?
What would be the May balance of Accounts Receivable for Diamond Window if the company's collection period is 60 days? 45 days?
Two 20-year bonds are identical in all respects except that one allows the issuer to call the bond in return for $1,000 cash at any time after five years .
What is the holding period return on a bond with a par value of $1,000, and a coupon rate of 6 percent if its price at the beginning of the year was $1,050.
Assuming the company's stock price does not change from its current price of $75 per share, how many shares must the company sell.
If markets are efficient, you would expect to see mutual funds outperforming the market for short periods of time.
What does the Irrelevance Proposition say about whether borrowing the money makes the investment more attractive?
Discuss the current account and its components and the capital and financial accounts and their components.
How these ratios depict the financial health of this company as compared to the industry average.
What is the beta of this company's stock? Based on the magnitude of the beta, do you think it is low risk, high risk, or somewhere in between?
Financial mangers make decisions today that will affect the firm in the future.
What would be the least amount of savings that would make this investment attractive to EEC?
What advantages do you see in using the payback method together with other capital budgeting methods?