Creston Machine Works has two divisions: a machine tool division and robotic welding division. The machine tool division has a market value of $150 million; the welding division has a market value of $450 million. Creston Machine Works is a private company, but its welding division is very comparable to Path Robotics, which has a WACC of 8% per year.  If the overall WACC for Creston Machine Works is 11% per year, what is the WACC for the machine tool division?

Jordan Corporation is considering a new product that will be very popular for a couple of years and then slowly lose its commercial appeal.  Sales are projected to be $90,000 in year one, $100,000 in year two, $60,000 in year three, $40,000 in year four, $20,000 in year five, and $10,000 in the final year six. Expenses are expected to be 40% of sales with net working capital requirements to be 15% of the following time period’s revenue.  Equipment of $126,000 will be required for the launch of the product; this equipment can be depreciated straight-line over six years and will be worthless at the end of the project.  The Tax Rate is 20% and the opportunity cost of capital is 14.5%. What is the Internal Rate of Return (rounded to two places)?   Multiple Choice   32.61%   None of the above   13.39%   18.32%   19.46%

Hoffman Ceramics, a division of Fielding Corporation, has an operating income of $64,000 and total assets of $400,000. The required rate of return for the company is 10%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Hoffman Ceramics has the opportunity to undertake a new project that will require an investment of $100,000. This investment would earn $14,000 for the company. Read the requirements. From the standpoint of Fielding Corporation this investment is is more than Fielding's required rate of return. desirable. The ROI of the investment opportunity Requirement 4. What would the residual income (RI) be for Hoffman Ceramics if this investment opportunity were to be undertaken? Would the manager of the Hoffman Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? First determine the formula to calculate the RI.…

Jaymes Corporation produces high-performance rotors. It expects to produce 56,000 rotors in the coming year. It has invested $10,150,000 to produce rotors. The company has a required return on investment of 16%. What is its ROI per unit? ROI per unit $

In 2004, Ferryman Company, a titanium producer in Pennsylvania, expanded its operations with the purchase of a $10 million rolling mill. Assume the new mill was fired up at the start of 2005 and runs at its peak capacity of 4 million pounds of output per year for 10 years. Assume that each pound of output generates $9.00 in revenues while costing $4.00 to produce. Assume that O&M costs are $10 million in 2005 and grow by $1 million per year after that. At the end of 10 years the mill will be sold for scrap for $500,000. Calculate the annual depreciation on the rolling mill using straight-line depreciation. What is the book value at the end of 2007? Scanned with CamScanner

You are an analyst working for Goldman Sachs, and you are trying to value the growth potential of a large, established company, Big Industries. Big Industries has a thriving R&D division that has consistently turned out successful products. You estimate that, on average, the division launches two projects every three years, so you estimate that there is a 66% chance that a project will be produced every year. Typically, the investment opportunities the R&D division produces require an initial investment of $10.2 million and yield profits of $1.07 million per year that grow at one of three possible growth rates in perpetuity: 3.2%, 0.0%, and - 3.2%. All three growth rates are equally likely for any given project. These opportunities are always "take it or leave it" opportunities: If they are not undertaken immediately, they disappear forever. Assume that the cost of capital will always remain at 12.1% per year. What is the present value of all future growth opportunities Big Industries…