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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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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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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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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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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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