Knight Transportation, Inc. issued bonds on January 1, 2000 with a face value of $1000 per bond. They are due on January 1, 2003. The coupon rate is 6.10% and the market rate is 5.80%. What is the market value of the bond and why? Use an Excel template and copy the answer to solution window.
Assume Chicago Corporation pays a $5.00 dividend and will have a sale price of $200 in one year. The current required rate of return is 20%. What is the current value of the share?
Assume the dividend in the next period is $10, the market rate is 12%, and the grow rate is projected at 4%. What is the current value of a share of stock?
Crescent Industries management is planning on replacing some machinery in its plant. The projected cash flows are shown below. The firm uses an 18% cost of capital.
Net Present Value Calculations
Year Cash Flow
0 ($3,300,000)
1 $875,123
2 $966,222
3 $1,145,000
4 $1,250,399
5 $1,504,455
Hathaway, Inc., a resort management company, is refurbishing one of its hotels at the cost of $6.8 million. Management expects this will lead to additional cash inflows of $1.8 million each year, over the next five years. Cost of capital is 12%. Calculate the IRR. Should they go ahead with this project?
Spokane Foundry plans to spend $1,000,000 on new tooling. They are projecting this investment will generate $300,000 a year over the next five years. Depreciation is projected to be $100,000 per year. The tax rate is 30% and they use a 20% discount rate. What is the NPV after taxes taking depreciation into consideration? Should they make the investment?