Homework Question: 24. What is the present value of a 10-year $5,000 annuity due if the discount rate is 10%?

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24. What is the present value of a 10-year $5,000 annuity due if the discount rate is 10%?

Round your answer to the nearest dollar.

A. $57,410
B. $51,541
C. $40,723
D. $33,795
E. $30,723

47. A company is looking to invest in new production machinery. The market value of common stock is $44 million, the market value of preferred stock is $9 million, and the market value of total debt is $33 million. Analysts have calculated the cost of common equity to be 16%, the cost of preferred equity to be 12%, and the cost of debt to be 9..5%.

What is the weighted average cost of capital if the marginal tax rate is 34%?

Round your answer to two decimal places.
A. 9.88%
B. 10.41%
C. 12.33%
D. 14.51%
E. 11.85%

49. What is the payback period for this stream of cash flows if the discount rate is 16%? A. 3.55 years B. 2.96 years C. 3.14 years D. 3.05 years E. 2.84 years

Year 0 Year 4 ($102.4 $37.4 $33.1 $28.4 $24.9$17.1$15.9 million)million million mliomillion million million

50. What is the net present value of this stream of cash flows if the discount rate is 9%? A. ($4,881) B. $8,421 C. $107 D. $3,128 E. ($2,415)

Year O Year 1 Year 2 Year 3 ($54,000) $21,000 $14,000 $23,400

53. A company is looking to invest in a new asset. The cost of the asset, including shipping and installation costs, is $8.4 million. The company has a buyer for the old asset who is willing to pay $1.2 million. Currently the book value of the old asset is $0. The company will also invest working capital in additional inventory in order to sustain the higher levels of efficiency that come with the new machinery. The total investment in net working capital will be $1.5 million. What is the initial outlay if the company’s marginal tax rate is 39%?

A. $10.63 million

B. $9.17 million

C. $8.70 million

D. $8.10 million

E. $11.10 million

55. After year 3, the company anticipates increasing free cash flows at a rate of 2% per year, indefinitely. The weighted average cost of capital is 11.5 %. What is the value of this firm? Round your answer to two decimal places. A. $1,984.53 million B. $1,578.95 million C. $2,341.78 million D. $1,178.35 million E. $2,147.03 million

A company has projected this information for the next 3 years. Year1 Year 2 Year 3 $541 million$643 million567 million Sales Costs Depreciation EBIT Taxes (34%) $100 million $190 million $64.6 million $301 million $100 million $242 million $82.3 million $321 milion $100 million $257 million $87.4 million $83 milliorn $79 million $21 million CAPEX $87 million Increases in NWC $23 million $24 million

56. After year 3, the company anticipates maintaining a future free cash flow that is equal to the third year’s free cash flow indefinitely. What is the value of this firm if the weighted average cost of capital is 10%? A. $2,668,484 B. $1,845,541 C. $1,984,525 D. $3,510,189 E. $2,829,325

A company has projected this information over each of the next 3 years. Sales Costs Depreciation EBIT Taxes (34%) Year 1 $550,540 120,400 $14,574 $415,386 $141,231 Year 2 $840,550 $202,350 $35,541 $602,659 $204,904 Year 3 $652,250 $184,350 $24,541 $443,359 $150,742 $31,541 $13,647 $28,541 $12,980 CAPEX $22,548 Increases in NWC $12,540

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