Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Nugent Communication Corp. is investing $7,311,256 in new technologies. The company expects significant benefits in the first three years after installation (as can be seen by the following cash flows), and smaller constant benefits in each of the next four years. Year 1 2 3 4-7 Cash Flows $2,540,230 $3,617,345 $2,867,006 $1,505,500 What is the discounted payback period for the project assuming a discount rate of 10 percent? (Round answer to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0 for the answer.) The discounted payback period for the project is ___________arrow_forwardA company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investments of shs 700,000 at time 0 and shs.1.0 million in year 1. After tax cash flows of shs.250,000 are expected in year 2, shs.300,000 in year 3, shs. 350,000 in year 4, and shs. 400,000 each year thereafter through year 10. b) Required i) return? What is the projects internal rate of What would be the case if the required rate of return ii) were 10 percent? Swipe up for filters Add a caption.arrow_forwardShabbona Partners expects to have free cash flows of $38,950,000 next year, and free cash flows are expected to grow at a constant rate of 3% per year. If the firm's WACC is 9% per year, what is the value of Shabbona's operations?arrow_forward
- Luthor Corp. is expected to generate a free cash flow (FCF) of $6,415.00 million this year (FCF₁ = $6,415.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Luthor Corp.’s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.) A.) $152,879.38 million B.) $115,164.84 million C.) $19,362.07 million D.) $138,197.81 million Luthor Corp.’s debt has a market value of $86,374 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 675 million shares of common stock outstanding, what is Luthor Corp.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to…arrow_forwardDemo Inc. is expected to generate a free cash flow (FCF) of $8,715.00 million this year (FCF1 = $8,715.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $156,455.46 million $26,304.04 million $207,691.99 million $187,746.55 million Demo Inc.'s debt has a market value of $117,342 million, and Demo Inc. has no preferred stock. If Demo Inc. has 600 million shares of common stock outstanding, what is Demo Inc.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $64.19 $71.71 $ 65.19 $195.57arrow_forwardSuppose you have an account that will grow to $253,000.00 in 25 years. It grows at 7.5% annual interest, compounded monthly, under the current investment strategy. The owner of the account, however, wants it to have $368,000.00 after 25 years. How much additional monthly contribution should they make to meet their goal?arrow_forward
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