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A project is expected to generate annual revenues of $120,900, with variable costs of $76,000, and fixed costs of $16,500. The annual depreciation is $4,050 and the tax rate is 21 percent. What is the annual operating cash flow?

Over a 25-year period an asset had an arithmetic return of 13.1 percent and a geometric return of 12.6 percent. Using Blume’s formula, what is your best estimate of the future annual returns over the next 10 years?

Which one of the following stocks is correctly priced according to CAPM if the risk-free rate of return is 3.4 percent and the market risk premium is 7.4 percent? Stock Beta Expected Return A .87 .096 B 1.09 .102 C 1.62 .146 D .98 .107 E 1.16 .139

The Sports Store has a $230,000 line of credit that requires 1.5 percent of the unused portion of the credit line be deposited in a non-interest-bearing account as a compensating balance. The interest rate on the borrowed funds is 2.05 percent per quarter. The Sports Store’s short-term investments are paying 1.5 percent per quarter. What is the effective annual interest rate on the line of credit if the entire credit line is borrowed for one year? Assume any funds borrowed or invested use compound interest.

Franktown Motors is expected to have an EBIT of $687,400 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $48,000, $7,000, and $42,000, respectively. All cash flow items are expected to grow at 6 percent per year for four years. After Year 5, the CFA* is expected to grow at 2.1 percent indefinitely. The company currently has $3.2 million in debt and 250,000 shares outstanding. The company’s WACC is 9.9 percent and the tax rate is 21 percent. What is the price per share of the company’s stock?

Assume the returns from an asset are normally distributed. The average annual return for the asset is 17.4 percent and the standard deviation of the returns is 27.5 percent. What is the approximate probability that your money will double in value in a single year?

ABC, Incorporated, has a beginning receivables balance on January 1st of $720. Sales for January through April are $480, $510, $590 and $610, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of March? Assume 365 days per year.

Gibaut & Watson Architecture is considering a project that will produce incremental annual sales of $361,000 and increase cash expenses by $198,000. If the project is implemented, taxes will increase from $31,000 to $47,000. The company is debt-free. What is the amount of the operating cash flow using the top-down approach?

Power Manufacturing has equipment that it purchased 7 years ago for $2,750,000. The equipment was used for a project that was intended to last for 9 years. However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $440,000 today. The company’s tax rate is 21 percent. What is the aftertax salvage value of the equipment?

A project has an initial cost of $6,900. The cash inflows are $850, $2,400, $3,100, and $4,100 over the next four years, respectively. What is the payback period?