1. ABC Inc. is considering an investment of $1,564 million with after-tax cash inflows of $408 million per year for six years and an additional after-tax salvage value of 24 million in Year 6. The required rate of return is 9%. What is the investment's Profitability Index (PI)?
2. Suppose the nominal rate is 16.14% and the inflation rate is 4.41%. Solve for the real rate. Use the Fisher Effect formula.
3. A 12-year project is expected to generate annual sales of $213,297, variable costs of $47,187, and fixed costs of $32,665. The annual depreciation is $11,269 and the tax rate is 34 percent. What is the annual operating cash flow?
4. Based on the following information, what is the portfolio beta?
|
Stock
|
Value
|
Beta
|
|
A
|
$27,723
|
2.56
|
|
B
|
$23,175
|
1.92
|
|
C
|
$7,266
|
0.47
|
|
D
|
$29,264
|
2.1
|
5. ABC Company is considering an investment that will cost the company $560 at time=0. The after-tax cash flows are expected to be $83 each year for 13 years. What is the payback period?