Acme Company is considering investing in Project X, which requires an initial investment of $285,000. Project X has an economic life of ten years, and the project is expected to generate the following results each year: cash revenues of $250,000, cash operating expenses of $208,000, depreciation expense of $10,000, and incremental operating income of $32,000. What is the payback period of this project in years? Round to one decimal place.

ABC Company anticipates its sales to be a bit lower than normal in January and February of the coming year due to major road construction on the street where it is located, which will draw away foot traffic from the store. The company anticipates that this will reduce its sales in these two months by 5%. Use the information from Problems 2–3 to update the sales forecast.

Assume you are the financial manager for a large electronics retailer. You are going to prepare a cashforecast. What key cash inflows and outflows do you anticipate will be in your forecast? Identify at least 5 cash inflows and at least 5 cash outflows, respectively. Your answer should be no more than 300 words.

ABC Company’s cost of goods sold last year was 60%. It anticipates that this will be the same in the coming year. Its sales returns and allowances are small, normally 1% of sales. Use the information from Problems 1–3 to estimate the company’s sales returns and allowances, net sales, and cost of goods sold and calculate its gross margin. (HINT: Calculate the sales returns and allowances by multiplying the Gross Sales by 1%. Then deduct this from Gross Sales to give Net Sales. Then use the Net Sales to calculate Cost of Goods Sold and finally the Gross Margin.)

SodaFizz has outstanding debt that has a market value of $3 million. The company’s stock has a book value of $2 million and a market value of $6 million. What are the weights in SodaFizz’s capital structure?

Using the original data from the spreadsheet in Q9, conduct a similar calculation to determine the yearly rate of return, for the following scenarios:House Purchase Price increases by 5% above initial price, leave all other values unchanged.House Purchase Price increases by 10% above initial price, leave all other values unchanged.House Purchase Price increases by 15% above initial price, leave all other values unchanged.These calculations should give you 3 different yearly rates of return for scenarios 1 to 3 above, respectively. Compare the change between the return rates as follows:Submit your spreadsheet with the above calculations and comment on how the successive changes (successive increases of 5% in scenarios 1 to 3 above) in house purchase price affects the yearly rate of return using the results from the % change equation above.

The Orange Corporation has to make a decision as to which of four investment proposals it should pursue. The four projects have the following NPVs and initial investment amounts: Project A: NPV = 1,000, initial investment = -100 Project B: NPV = 2,400, initial investment = -300 Project C: NPV = 750, initial investment = -83 The firm has limited funds available to spend on capital projects this year. How would you rank these projects in terms of their priority? A, C, B B, C, A A, B, C B, A, C

Optimist Company can sell common shares at $30 per share and can obtain debt funding at 8 percent. It has a marginal income tax rate of 25 percent. The yield on US Treasury securities is 3 percent. The market risk premium is 6.0 percent, and the firm’s beta is 0.9. It has a targeted debt-to-equity ratio of 1:1. What is its after-tax cost of debt?

Westland Manufacturing spends $20,000 to update the lighting in its factory to more energy-efficient LED fixtures. This will save the company $4,000 per year in electricity costs. What is the payback period of this project?

After viewing the video from CFI (with link below) which shows how to calculate the WACC for Brick and Mortar Co, answer the following questions. CFI – Weighted Average Cost of Capital.In the video a tax rate of 30% was used. Redo the calculation with a tax rate of 15%. If the WACC is the total combination of cost of equity and cost of debt, which of these two components does the reduced tax rate affect and show if that component of the WACC increase or decrease with the reduction of the tax rate to 15%. Based on this calculation explain what happens when the tax rate is reduced to the cost of capital.