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olasank [31]
3 years ago
9

Carson Electronics uses65 percent common stock and 35 percent debt to finance its operations. The aftertax cost of debt is 5.8 p

ercent and the cost of equity is 16.1 percent. Management is considering a project that will produce a cash inflow of $42,000 in the first year. The cash inflows will then grow at 3 percent per year forever. What is the maximum amount the firm can initially invest in this project to avoid a negative net present value for the project?
Business
1 answer:
Lina20 [59]3 years ago
8 0

Answer:

$471,319.20

Explanation:

Carson's WACC = (0.65 x 16.1%) + (0.35 x 5.8%) = 10.47 + 2.03 = 12.5%

The PV of the investment = CF / (1 + wacc) + {[CF / (wacc - g)] / (1 + wacc)}

PV = $46,000 / 1.125 + {[$46,000 / (9.5%)] / 1.125}

PV = $40,890.71 + ($484,210.53 / 1.125)

PV = $40,890.71 + $430,428.49 = $471,319.20

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It is January 1 of Year 2. Sales for Harry Company for January, February, and March are forecasted to be as follows: January, $2
r-ruslan [8.4K]

Answer:

$248,000

Explanation:

Given that 20% of sales are for cash, Of the credit sales, 10% are collected during the month of sale, 30% in the following month, and 60% in the second following month. It means that credit sales is 80% of sales.

Cash collection for January will include 20% sales in January, 8% (10% * 80%) sales in January, 24% (30% *80%) sale in December and 48% (60% * 80%) of sales in November.

The forecasted amount of total CASH COLLECTIONS FROM SALES in January

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= $248,000

4 0
4 years ago
One strategy to keep college tuition costs down is to attend a(n) _____. A.out-of-state school B.community college C.private col
Molodets [167]
It would be B. I know this due to my sister just going to college and having to focus on the price range.
8 0
4 years ago
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3 years ago
Design Dividends on preferred stockCorporation has 400,000 shares of $10 par-value common stock issued and outstanding when the
-Dominant- [34]

Answer:

correct option is B : $0

Explanation:

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