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Carlita’s Tasty Tacos is considering opening a new location in the large city that currently has two other locations.  The combined sales at the other two locations are $1,245,000 annually.  The new location is expected to generate sales of $450,000 in the first year with 4% sales growth per year for the next 7 years.  If the operating profit margin is 40% and the tax rate is 10%, what is the net after-tax cash flow for the new unit for the first year of operations?

In the MasterDecker case, which projects were positive NPV when using correct estimations of the cash flows?

In the MasterDecker case, which projects had Payback Periods of less than one year when using correctly estimated cash flows?

Use the following cash flows for years 0-7 to calculate the Payback Period for Project Florentine.  CF 0          (161,000) CF 1              43,000 CF 2              41,000 CF 3              40,000 CF 4              38,000 CF 5              34,000 CF 6              34,000 CF 7              28,000

If two firms have identical net profit margins and identical total asset turnover ratios, the firm with the higher equity multiplier will have a higher return on equity.

Use the following Weighted Average Cost of Capital (WACC) and the cash flows for years 0-4 to calculate the Net Present Value (NPV) for Project Freefall.  WACC 5% CF 0         (131,000) CF 1             45,000 CF 2             47,000 CF 3             49,000 CF 4             38,000                                  

Which of the following does NOT affect a company’s Free Cash Flow (FCF)?

Use the following information to determine the net profit margin.  Total assets  $   200,000.00 Total liabilities          85,000.00 Total equity        115,000.00 Sales        580,000.00 Cost of goods sold        360,000.00 Net income          31,320.00 Enter your answer rounded to 3 decimal places.  In other words, if your answer is 6.0589%, enter 0.0606.  If your answer is 8.1418%, enter 0.0814.

In the CAPM model, the market beta is by definition equal to 1.

If the estimated cost of equity is 6.69%, the estimated cost of debt is 5.50%, the tax rate is 15.40% and the market value of debt and equity is 61 million and 39 million, respectively, what is the weighted average cost of capital (WACC) for the firm?