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A gym owner is considering opening a location on the other side of town. The new facility will cost$1.52 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $569,000 in annual sales. Variable costs are 44 percent of sales, the annual fixed costs are $92,500, and the tax rate is 21 percent. What is the operating cash flow?

The inventory turnover for Haute Hippie has gone from an average of 10.43 times to 11.34 times per year. How does this affect the inventory period? Assume 365 days per year.

A project has projected cash flows of −$148,500, $32,800, $64,200, −$7,500 and $87,300 for Years 0 to 4, respectively. Should this project be accepted based on the combination approach to the modified internal rate of return if both the discount rate and the reinvestment rate are 10.5 percent? Why or why not?

Bleakly Enterprises has a capital structure of 56 percent common stock, 4 percent preferred stock, and 40 percent debt. The flotation costs are 3.7 percent for debt, 4.8 percent for preferred stock, and 5.2 percent for common stock. The corporate tax rate is 21 percent. What is the weighted average flotation cost?

Kelso’s has a debt-equity ratio of .62 and a tax rate of 21 percent. The firm does not issue preferred stock. The cost of equity is 16.3 percent and the aftertax cost of debt is 5.21 percent. What is the weighted average cost of capital?

Six months ago, you purchased 1,200 shares of ABC stock for $33.56 a share. You have received dividend payments equal to $.40 a share. Today, you sold all of your shares for $36.70 a share. What is your total dollar return on this investment?

Based on the past 13 years, Valdez Interiors common stock has yielded an arithmetic average rate of return of 12.6 percent. The geometric average return for the same period was 11.8 percent. What is the estimated return on this stock for the next three years according to Blume’s formula?

Your portfolio is invested 25 percent each in Stocks A and C, and 50 percent in Stock B. What is the standard deviation of your portfolio given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .07 .28 .14 .11 Good .55 .19 .12 .09 Poor .36 −.21 .07 .06 Bust .02 −.65 .03 −.03

A stock had returns of 11.18 percent, −15.37 percent,21.53 percent, 26.67 percent, and 9.93 percent over the past five years. What was the geometric average return for this stock?

A stock had annual returns of 7 percent, −28 percent, 13 percent, and 23 percent for the past four years. The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.