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Eugene Shoes has an asset beta c sign a new WNBA star to a 5-yea producing each shoe is $20.00, a the net present value of signing t 21.39 O 56.11 O 16.39

Eugene Shoes has an asset beta c sign a new WNBA star to a 5-yea producing each shoe is $20.00, a the net present value of signing t 21.39 O 56.11 O 16.39

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Eugene Shoes has an asset beta of 1.5 and is all equity. The company consists of two divisions: shoes and athletics apparel. The shoe division wants to sign a new WNBA star to a 5-year deal that starts next year. She is expected to sell 50K shoes per year at a price of $130.00 per shoe. The variable cost of producing each shoe is $20.00, and the star has requested an up-front payment of $5M this year. The discount rate of the shoe division is 9 percent. What is the net present value of signing the athlete? - ○ 21.39 - ○ 56.11 - ○ 16.39
Transcribed Image Text:Eugene Shoes has an asset beta of 1.5 and is all equity. The company consists of two divisions: shoes and athletics apparel. The shoe division wants to sign a new WNBA star to a 5-year deal that starts next year. She is expected to sell 50K shoes per year at a price of $130.00 per shoe. The variable cost of producing each shoe is $20.00, and the star has requested an up-front payment of $5M this year. The discount rate of the shoe division is 9 percent. What is the net present value of signing the athlete? - ○ 21.39 - ○ 56.11 - ○ 16.39
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