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Hi **Weegy:** hi, how can i help you ? **User:** . Rent-to-Own Equipment Co. is considering a new inventory system that will cost $750,000. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $325,000 in year two, $150,000 in year three, and $180,000 in year four. Rent-to-Own's required rate of return is 8%. What is the net present value of this project? (Points : 1)
$104,089
$100,328
$96,320
$87,417 **Weegy:** internal rate of return = -750,000 +[350,000/(1 + 0.08)^1]+[325,000/(1+.08)^2]+[150,000/(1+.08)^3]+[180,000/(1+.08)^4]
-750,000+ 324,074+278,635+119,075+132,305
Internal Rate of Return is $104,089 (answer) (More)

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Asked 11/25/2012 7:13:20 PM

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hi **Weegy:** Hello! Do you have a question today? **User:** . Kelly Corporation will issue new common stock to finance an expansion. The existing common stock just paid a $1.50 dividend, and dividends are expected to grow at a constant rate 8% indefinitely. The stock sells for $45, and flotation expenses of 5% of the selling price will be incurred on new shares. What is the cost of new common stock be for Kelly Corp.? (Points : 1)
11.33%
11.51%
11.60%
11.79%
12.53% **Weegy:** The answer is 11.79%
Dividend just paid (D0) = $1.50
Expected dividend growth rate (g) = 8%
Current stock value = $45
Flotation expenses = 5%
Cost of new common stock (R) =?
Cost of new common stock (R) = [(D1 / {P0 – F}] + g
D1 = $1.50 (1+0.8)
D1 [ = $1.62
Flotation Costs = 5% of selling price
Cost of new common stock (R) = [($1.62 / {$45 - $2.25}] + 0.08
Cost of new common stock (R) = = [$1.62 / $42.75] + 0.08
Cost of new common stock (R) = 0.11789 (or) 11.79%
Cost of new common stock (R) = 11.79%
www.transtutors.com/questions/tts-finance-3-prob-151888.htm ] (More)

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Asked 11/25/2012 7:27:11 PM

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A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $925. If the corporation sells more bonds it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? **Weegy:** 3.74% $1,000 and a coupon rate of 5%- - - - - - - - -50
5.96%
after tax= 5.96%(1-35%)= 3.74% **User:** Welltran Corp. can purchase a new machine for $1,875,000 that will provide an annual net cash flow of $650,000 per year for five years. The machine will be sold for $120,000 after taxes at the end of year five. What is the net present value of the machine if the required rate of return is 13.5%. (Points : 1)
$558,378
$513,859
$473,498
$447,292 **Weegy:** $447,292 (More)

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Asked 11/25/2012 8:04:23 PM

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hi **Weegy:** Hello, what question can I help you with? **User:** The simulation approach provides us with (Points : 1)
a single value for the risk-adjusted net present value.
an approximation of the systematic risk level.
a probability distribution of the project's net present value or internal rate of return.
a graphic exposition of the year-by-year sequence of possible outcomes. **Weegy:** The answer is a probability distribution of the project's net present value or internal rate of return.
The simulation approach provides us with a probability distribution of the project's net present value or internal rate of return. [
] (More)

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Asked 11/25/2012 8:28:16 PM

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hi **Weegy:** Hello and welcome to Weegy! Is there something I can help you with? **User:** A new machine can be purchased for $1,200,000. It will cost $35,000 to ship and $15,000 to modify the machine. A $12,000 recently completed feasibility study indicated that the firm can employ an existing factory owned by the firm, which would have otherwise been sold for $180,000. The firm will borrow $750,000 to finance the acquisition. Total interest expense for 5-years is expected to approximate $350,000. What is the investment cost of the machine for capital budgeting purposes? (Points : 1)
$2,180,000
$1,780,000
$1,442,000
$1,430,000 **Weegy:** The answer is $1,430,000
$1,430,000 is the investment cost of the machine for capital budgeting [ purposes.
] (More)

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Asked 11/25/2012 8:36:04 PM

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