# Project #76821 - Corporate Finance

 1.       Calculate the PVs of depreciation tax shields in the five-year and seven-year classes shown in Table 6.4. Assume the tax rate is 35% and the discount rate is 10%. Lastly, assume the asset in question costs \$1. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

 Present Value Five year Seven year

 2.       The following table tracks the main components of working capital over the life of a four-year project.

 2010 2011 2012 2013 2014 Accounts receivable 0 150,000 225,000 190,000 0 Inventory 75,000 130,000 130,000 95,000 0 Accounts payable 25,000 50,000 50,000 35,000 0

 Calculate net working capital and the cash inflows and outflows due to investment in working capital. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter 0 wherever required.)

 2010 2011 2012 2013 2014 Working capital Cash flows

 3.       Machines A and B are mutually exclusive and are expected to produce the following real cash flows:

 Cash Flows (\$ thousands) Machine C0 C1 C2 C3 A –100 +110 +121 B –120 +110 +121 +133

 The real opportunity cost of capital is 10%. (Use PV table.)

 a. Calculate the NPV of each machine. (Do not round intermediate calculations. Round your answers to the nearest thousand.)

 Machine NPV A \$ B \$

 b. Calculate the equivalent annual cash flow from each machine. (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places and final answers to the nearest thousand.)

 Machine Cash flow A \$ B \$

c.

 Machine A Machine B

4.       A game of chance offers the following odds and payoffs. Each play of the game costs \$100, so the net profit per play is the payoff less \$100.

 Probability Payoff Net Profit 0.10 \$500 \$400 0.50 100 0 0.40 0 –100

 a-1. What is the expected cash payoff?

 Expected cash payoff \$

 a-2. What is the expected rate of return?

 Expected rate of return %

 b-1. Calculate the variance of this rate of return.  (Ignore the technical point referred to in footnote 16). (Round your answer to the nearest whole number.)

 Variance

 b-2. Calculate the standard deviation of this rate of return.  (Ignore the technical point referred to in footnote 16). (Round your answer to the nearest whole percent.)

 Standard deviation % 5.       Consider the following information:

 Stock Return if Market Return Is: Stock –10% +10% A 0 +20 B –20 +20 C –30 0 D +15 +15 E +10 –10

 What is the beta of each of the stocks? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 1 decimal place.)

 Stock Beta A B C D E

 Subject Business Due By (Pacific Time) 07/19/2015 10:00 am
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