Reference for questions below WORKING CAPITAL POLICY Calgary Company is thinking of modifying its working capital assets policy. Fixed assets are P600,000, sales are projected at P3 million, the EBIT/sales ratio is projected at 15%, the interest rate is 10% on all debt, the tax rate is 40%, and Calgary plans to maintain a 50% debt-to-assets ratio. Three altemative current asset policies are under consideration: 40%, 50%, and 60% of projected sales. What is the expected return on equity under restricted 40%? Your answer What is the expected return on equity under moderate 50%? Your answer What is the expected return on equity under relaxed 60%? Your answer

Reference for questions below WORKING CAPITAL POLICY Calgary Company is thinking of modifying its working capital assets policy. Fixed assets are P600,000, sales are projected at P3 million, the EBIT/sales ratio is projected at 15%, the interest rate is 10% on all debt, the tax rate is 40%, and Calgary plans to maintain a 50% debt-to-assets ratio. Three altemative current asset policies are under consideration: 40%, 50%, and 60% of projected sales. What is the expected return on equity under restricted 40%? Your answer What is the expected return on equity under moderate 50%? Your answer What is the expected return on equity under relaxed 60%? Your answer

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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XYZ Corporation is considering a capital budgeting project and requires a detailed analysis. The company has provided youwith the following financial information and ratios:Return on Investment (ROI): 15%Payback Period: 3 yearsNet Present Value (NPV): R50,000Internal Rate of Return (IRR): 12%Cash Flows:Year 1: R20 000Year 2: R30 000Year 3: R40 0001.4 Calculate the ARR for XYZ Corporation. Assume depreciation is calculated on the straight-linemethod and that the project has a scrap value of R5000
Beck Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,920,000. Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of $2,600,000. The following information is available: Required investment Estimated life Estimated residual life Estimated annual cash inflows over the next 8 years Required rate of return The net present value of the Kentucky proposal is closest to: Present Value of $1 Periods 7 8 9 10 11 12 6% 0.665 0.627 0.592 0.558 0.527 0.497 Present Value of Annuity of $1 6% Periods 7 - 8 9 10 11 12 A. $1,406,720 B. $4,006,720 OC. $1,374,400 OD. $1,342,080 5.582 6.210 6.802 7.360 7.887 8.384 8% 0.583 0.540 0.500 0.463 0.429 0.397 8% 5.206 5.747 6.247 6.710 7.139 7.536 10% 0.513 0.467 0.424 0.386 0.350 0.319 10% 4.868 5.335 5.759 6.145 6.495 6.814 12% 0.452 0.404 0.361 0.322 0.287 0.257 12% 4.564 4.968 5.328 5.650 5.938 6.194 C... Indiana proposal $1,920,000 8 years…
How do I compute the average rate of return of the five proposals? Rounding answers to one decimal place.
A proposed project is expected to increase accounts receivable by $25,000, decrease inventory by $8,000 and increase accounts payable by $16,000. What is the project's initial requirement for net working capital? Select one: a. +$17,000 b. $1000 c. -$9,000 d. +$9,000
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $176,000 $192,500 $212,000 Annual net income: Year 1 15,400 19,800 29,700 15,400 18,700 25,300 15,400 17,600 23,100 4 15,400 13,200 14,300 15,400 9,900 13,200 Total $77,000 $79,200 $105,600 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table. (a) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) years Project Bono years Project Edge years Project Clayton
Please complete these charts
NPV (net present value) Craig is considering several capital investments for the upcoming year. Use the NPV (net present value) method to determine whether the company should investment in the following independent projects: Project 1 costs $28,000 and offers 8 annual cash flows of $8,600. Craig feels this type of investment should require an annual return of 16% on projects like this. Project 2 costs $35,000 and offers 6 annual cash flows of $12,000. Craig feels this type of investment should require an annual return of 12% on projects like this. Requirements 1. Calculate the NPV of both of these projects 2. What is the maximum acceptable price Craig should pay for each of these projects?
Based on the information below, calculate the adjusted present value (APV), given that the project lifespan is 1 year and is being financed by 30% debt: Investment at t=0 € 33,000 Cashflow after yr1 € 39,600 Cost of capital (COC) 53% Cost of debt 43% Tax 33% a) The adjusted present value (APV) is: €-4325.31 b) The adjusted present value (APV) is: €-5307.69 c) The adjusted present value (APV) is: €-7117.65 d) The adjusted present value (APV) is: €-6135.26
Shaylee Corp has $2.10 million to invest in new projects. The company’s managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Project A Project B Project C Project D Initial investment $ 720,000 $ 400,000 $ 960,000 $ 1,115,000 Present value of future cash flows 935,000 500,000 1,650,000 1,310,000 Required:1. Is Shaylee able to invest in all of these projects simultaneously?multiple choice No Yes 2-a. Calculate the profitability index for each project. (Round your answers to 4 decimal places.)

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