Finance Answers

A smooth saleperson comes to visit your office with a proposal to sell your firm some new machinery to install in your vacant warehouse building on the property that has no alternative use. The salesperson claims that this technology produces products that should provide you with revenues next year of $7 million with a cost of goods to be $5 million. Both of these are expected to grow at a rate of 15% per year till year 6. Your firm faces a 35% tax rate, a 12% discount rate and you can depreciate your new investment using the straight line method over the six years, at which point the value of the venture moving forward will be $2 million. (This $2 million is the terminal value that is in year 6 dollars and is the PV of all cash flows year 7 and beyond.) The capital expenditure of this project is $6M. What is the NPV of the project? Assume that you have no significant working capital costs.(Enter just the number without the $ sign or a comma; round off decimals.) (You are strongly encouraged to use a spreadsh

The city of Middleville is considering offering public bus service. Setting up the service will cost the city $1.2M (where M stands for million). The useful life of the buses is 25 years. Annual maintenance of the buses would cost $100,000 per year and they would need a major overhaul in year 15 that will cost a total of $700,000. This overhaul is in addition to the annual maintenance. Annual labor and administrative costs will begin at $180,000 in year 1 and grow at 2% per year thereafter. The buses will generate a revenue of $150,000 in year 1 and it will grow at 4% per year thereafter. Reduced parking requirements and other benefits generated by the project will save the city $200,000/year. The salvage value (price the city can get in the future after maintenance) of the used buses in year 25 is expected to be $300,000. What is the NPV of the bus proposal? The city does not pay taxes and the discount rate is 5%.

A:
1) 59693
2) -82207
3) 257413
4) 1381432

Should Hong Kong maintain its peg to the US dollar or should it change its monetary policy and freely float? Why?

A dealer of electronic goods allows 12% discount and still makes a profit of 10%. If he gains Rs 120 on the sales of goods, find the marked price

Mark purchases a stock one year ago for $26. the stocj is now worth $34, and the totl return to Mark for owning the stock was 0.39. what is the dollar amount of dividents that he received for owning the stock during the year?

“Funds flow analysis represents a stock to flow linkage.” – Justify your views.

2. Burger King Corp has $30 million of sales, $4 million of inventories, $6 million of receivables and $2 million of payables. Its cost of goods sold is 90 percent of sales. What is Burger King’s Cash Conversion Cycle? If Burger King could lower its inventories and receivables by 15 percent each and increase its payables by 15 percent, all without affecting either sales or cost of goods sold, what would be the new CCC?

4. From the following information pertaining to M/s ABC & Co. Ltd., prepare its trading, profit & Loss A/c for the year ending 31st March 2012 and summarized Balance Sheet as on that date.
Current ratio - 2.5
Quick Ratio - 1.3
Proprietary ratio - 0.06
Gross Profit to sales - 10%
Debtors Velocity - 40 days
Sales - 2,73,000
Working capital - 1,20,000
Bank overdraft - 2,15,000
Share Capital - 2,50,000
Closing Stock is 10% more than opening stock
Net profit 10% of proprietary fund.

1.explain fiscal policies and its objectives
2.explain budgets under the following meaning (i.meaning) (ii.types) (iii.importance)

How much is Capital really mobile within the E.U?