5 1) The firm's purchase of real assets is also referred to as the:A) capital structure decision.B) CFO decision.C) financing decision.D) capital investment decision.2) A Wall Street Journal quotation for a company has the following values: Div: $1.12, PE:18.3, Close: $37.22. Calculate the approximate dividend payout ratio for the company.A) 18 percentB) 35 percentC) 45 percentD) 55 percent3) The ultimate financial goal of a corporation is to:A) minimize stockholder risk.B) maximize profit.C) maximize the value of the corporation to the stockholders.D) increase size of the firm.4) A four-year bond has an 8 percent coupon rate and a face value of $1,000. If the currentprice of the bond is $878.31, calculate the yield to maturity of the bond (assuming annualinterest payments).A) 8 percentB) 10 percentC) 12 percentD) 6 percent5) A project requires an investment of $900 today. It can generate sales of $1,100 per yearforever. Costs are $600 for the first year and will increase by 20 percent per year. (Assume allsales and costs occur at year-end [i.e., costs are $600 @ t= 1].) The project can be terminatedat any time without cost. Ignore taxes and calculate the NPV of the project at a 12 percentdiscount rate.A) $65.00B) $57.51C) $100.00D) It cannot be calculated as g>r.6) World-Tour Co. has just now paid a dividend of $2.83 per share (Divo); its dividends arexpected to grow at a constant rate of 6 percent per year forever. If the required rate of returon the stock is 16 percent, what is the current value of the stock, after paying the dividend?A) $70B) $56C) $30

Answered: Image /qna-images/answer/fc6ad2a4-96e9-4306-8e3a-a012e2619603.jpg

5) A project requires an investment of $900 today. It can generate sales of $1,100 per year forever. Costs are $600 for the first year and will increase by 20 percent per year. (Assume all sales and costs occur at year-end [i.e., costs are $600 @ t = at any time without cost. Ignore taxes and calculate the NPV of the project at a 12 percent discount rate. 1].) The project can be terminated A) $65.00 B) $57.51 C) $100.00 D) It cannot be calculated as g> r.

5) A project requires an investment of $900 today. It can generate sales of $1,100 per year forever. Costs are $600 for the first year and will increase by 20 percent per year. (Assume all sales and costs occur at year-end [i.e., costs are $600 @ t = at any time without cost. Ignore taxes and calculate the NPV of the project at a 12 percent discount rate. 1].) The project can be terminated A) $65.00 B) $57.51 C) $100.00 D) It cannot be calculated as g> r.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 7E

See similar textbooks

Similar questions

(UPVOTE WILL BE GIVEN. PLEASE WRITE THE COMPLETE SOLUTIONS. NO LONG EXPLANATION NEEDED. BOX THE FINAL ANSWER.) AARON Capital Investments Corporation was offered a business proposal. The details of the proposal are as follows. Determine the following: a. Enumerate all the cash inflows in the problem. Classify the cash inflow if it is in its present value, future value, or annual value. b. Enumerate all the cash outflows in the problem. Classify the cash outflow if it is in its present value, future value, or annual value. c. When the MARR of the project is 10% and you wish to determine the future worth of the project, write down the complete working formula (with substituted values) to solve the problem.
If a firm earns $375 billion in profits for the year and they retain $218 billion, what is the percent dividend payout rate?
John was a high school teacher earning a net salary of $54,000 per year. After working for one year, he quit his job to start his own milk bar business. In order to start the business, John borrowed $40,000.00 from the bank and was paying 5 percent interest per year. Also, John withdrew $ 50,000 from his savings account. He had been earning 5 percent interest per year for this account. John’s first year of business can be summarised as follows: Based on your calculations of accounting profit and economic profit, would you advise John to return to his teaching job or continue with the milk bar business? Show your work!
1 Jim owns shares of Abco, Inc. preferred stock which he says provides him with a constant 6.58 percent rate of return. The stock is currently priced at $45.60 a share. What is the amount of the dividend per share? Round to the nearest cent. Do not include the dollar sign in your answer. (i.e. If your answer were $123, then type 1.23 without a S sign)
Suppose you were evaluating three assets: A, B and C. Suppose you learned that the long-run (i.e. over the past century or so) average annual compounded rate of return for the three assets were as follow: A=9.5%; B=4.95%; and C= 6.25%. Ceteris paribus Asset _is most likely a diverse portfolio of U.S. common stocks; Asset is most likely a diverse portfolio of U.S. corporate bonds; and Asset is most likely a portfolio of U.S. Treasury securities. Select one: O a. A; B; C O b. A; C; B O c. B; C; A d. B; A; C
Show in excel A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4, 281 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit where they will earn 15%. (a) Identify six combinations of project investments and a bank deposit which exhaust the budget. (b) Which of the above combinations should the firm choose: when the reinvestment rate is 15%? (ii) when the reinvestment rate is 20%?
A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units. a) Calculate the break-even point (i) in units (ii) in dollars (2 decimal places) (iii) as a percent of capacity b) Draw a detailed break-even chart. (You do not have to submit this part; just draw it for your own practice.) c) Calculate the break-even point (in units) if fixed costs are reduced to $7020.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $78.00
Which of the following bond has the best value to an investor to buy? a) A 5 percent coupon bond priced at $1,000 b) A 10 percent coupon bond priced at $1,000 c) A 15 percent coupon bond priced at $1,000 d) A 20 percent coupon bond priced at $1,000 e) A zero-coupon bond priced at $1,000 22 645
A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4,231 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit. Identify seven combinations of project investments and a bank deposits which exhaust the budget. Which of the above combinations should the firm choose when the bank deposit rate is (i) 15% or (ii) 20%? Explain your answer and show your work. Suppose there is no option to deposit in the bank, but the projects are "divisible" (e.g. you may have 25% of project A). Which combination should the firm choose? Explain your answer and show your work. Use 15% as the deposit rate (discount rate).
Capital Investment Decision:Accounting Rate-of-Return Method Boink Corporation manufactures metal hard hats for on-site construction workers. Recently, management has tried to raise productivity to meet the growing demand from the real estate industry. The company is now thinking about buying a new stamping machine. Management has decided that only capital investments that yield at least a 14 percent return will be accepted. The new machine would cost $325,000; revenue would increase by $98,400 per year; the residual value of the new machine would be $32,500; and operating cost increases (including depreciation) would be $74,600.Using the accounting rate-of-return method, decide whether the company should invest in the machine. Show all computations to support your decision.
a) Assume we are now in mid- or late February 2022. After conducting your own analysis, you have made a decision to buy shares of ENV in March. However, your friend, Jaden who is a financial advisor for ENV tells you that ENV's earnings for the fourth quarter 2021 is higher than the analyst estimates. He suggests you to buy its shares immediately (i.e. in midor late February 2022) before this information is announced to the public (and price increases). Please state and explain which CFA Institute Code and Standards Jaden has breached.
[1] A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $35.00; variable cost per unit is $15.00; fixed costs are $8200.00; and capacity per period is 740 units. a) Calculate the break-even point (i) in units (ii) in dollars (iii) as a percent of capacity b) Draw a detailed break-even chart. c) Calculate the break-even point (in units) if fixed costs are reduced to $7000.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $40.00 ANSWER WITH PROPER SOLUTIONS PLEASE