Finance Answers

2. Cricket World Cup (CWC) is considering a project proposal which requires an initial investment of $72,625 and it is expected to have net cash flows of $15,000 per year for 8 years. The firm cash flows are discounted at a rate of 12 percent.
a. What is the project’s Net Present Value (NPV)? (Rounded to 2 decimal places)
b. What is the project’s discounted payback period? (Rounded to 2 decimal places)

Burke Tires just paid a dividend of D 0 = ₱ 1.32. Analysts expect the company's dividend to grow by 30%
this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this
low-risk stock is 9.00%. What is the best estimate of the stock’s current market value?

Leather Goods Inc. wants to expand its product line into wallets. It is considering producing 50,000 units per year. The price will be $15 per wallet the first year and the price will increase 3% per year. The variable cost is expected to be $10 per wallet and will increase by 5% per year. The machine will cost $400,000 and will have an economic life of 5 years. It will be fully depreciated using the straight line method. The discount rate is 15% and the corporate tax is 34%. What is the NPV of the investment?

An automobile manufacturer estimates that total variable costs will be $500 million and total fixed costs will be $1 billion in the next year. In setting price it is assumed that sales will be 80 percent of the firm’s 125,000 vehicle per year capacity, or 100,000 units. The target rate of return is 10 percent, which is to be earned on an investment of $2 billion. If prices are set on a cost-plus basis, what prices should be charged for each automobile?

Given the production function
Q = A Kα Lβ Nγ
where Q is the rate of output and K, L, and N represent inputs of capital, labor and land, respectively, determine:
(a)The specific conditions under which returns to scale would be increasing, constant, and decreasing.
(b)The equation for the marginal product function for each input

Question 4
In high school Jeff often made money in the summer by mowing lawns in the neighborhood. He just finished his freshman year of college and, after taking a Business 101 class, he has some ideas about how to scale up his lawn mowing operation. Previously, he had used his father's push mower, but he is thinking about getting a riding mower that will save time and allow him to do more lawns. He found a used, zero turn, riding mower on Craigslist for $1,000. He will also need a trailer to pull the mower behind his pickup; that will cost him an additional $600. With the new mower he can take on an additional 20 lawns per week at an average cash inflow of $22 per lawn he will receive at the end of each week. He has 12 weeks of summer in which to mow lawns. (For convenience, assume that the mower and trailer will have no value after Jeff is done with his work this summer.) The discount rate for Jeff is 11% (note that this is an annual rate). What is the Net Present Value of the mower/trailer project?

Question 2
Juanita has an opportunity to invest in her friend's clothing store. The initial investment is $10,200 and the expected annual cashflows thereafter are {$300; $700; $1,300; $2,000; $2,000; $5,000; $5,000}. What is Juanita's IRR on this investment? (Allow two decimals in the percentage but do not enter the % sign.)

Juanita has an apportunity to invest in her friend clothing store.the initial investment is $10,200 and the expected annual cash flow thereafter are ($300,$700,$1,300, $2000,$5000,$5000) . What is Juanita IRR on this investment?

3.Assume now that there are two groups in the population. Each contributes equally to the cost of the project, but two-thirds of the benefits accrue to the richer group. Discuss how this alters the cost-benefit calculation. Under what circumstances will the decision to undertake the project be altered?

1.Consider the projest that costs $100,000 and yields a return of $30,000 for five years. At the end of the fifth year, there is the cost of $20,000 to dispose of the waste from the project. Should the project be undertaken if the discount rat eis 0? 10 percent? 15 percent? The interest rate at which the net present discounted value of the project is zero is referred to as the internal rate of return of the project