Pet Supply purchased $62,800 of fixed assets two years ago. The company no longer needs these assets so it is going to sell them today for $29,500. The assets are classified as five-year property for MACRS. The MACRS rates are .2, .32, .192, .1152, .1152, .0576, for Years 1 to 6, respectively. What is the net cash flow from this sale if the firm’s tax rate is 23 percent and no bonus depreciation is taken?

Uroda Coffee has computed its fixed costs to be $.27 for every cup of coffee it sells given annual sales of 739,000 cups. The sales price is $.99 per cup while the variable cost per cup is $.12. How many cups of coffee must it sell to break even on a cash basis?

Suppose ALK Company needs $13.8 million to build a new assembly line. The target debt-equity ratio is .48. The flotation cost for new equity is 9.6 percent, but the floatation cost for debt is only 5.1 percent. What is the true cost of building the new assembly line after taking flotation costs into account?

What is the standard deviation of the returns on a portfolio that is invested in Stocks A, B, and C? Twenty percent of the portfolio is invested in Stock A and 35 percent is invested in Stock C. State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .04 .17 .09 .09 Normal .81 .08 .06 .08 Recession .15 −.24 .02 −.13

You own a portfolio equally invested in a risk-free asset and two different stocks. One of the stocks has a beta of 1.32. The total portfolio is equally as risky as the market. What is the beta of the second stock?

Rachel’s has a $45,000 line of credit with an interest rate of 7.4 percent and a compensating balance requirement of 2.75 percent. The compensating balance is based on the total amount borrowed with funds being held in an interest-free account. What is the effective annual interest rate if the company requires $28,000 of borrowed funds for one year?

The relevant discount rate is 14 percent for a project with cash flows of −$9,200, $4,600, $3,300, and $3,800 for Years 0 to 3, respectively. What is the profitability index?

What is the expected return on a portfolio that is equally weighted between Stocks M and N given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock M Stock N Boom .13 .18 −.14 Normal .82 .06 .06 Recession .05 −.14 .18

Vela Movers has an average collection period of 34 days. The company factors all receivables immediately at a discount rate of 1.8 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing?

The amount that O’Leary’s purchases from its suppliers each quarter equals 61 percent of the next quarter’s forecasted sales. The payables period is 60 days. Wages, taxes, and other expenses are 18 percent of sales, and interest and dividends are $72 per quarter. No capital expenditures are planned. The projected sales for Year 1 are $730, $770, $710, and $850 for Quarters 1 to 4, respectively. Sales for the first quarter of Year 2 are projected at $760. What is the amount of the total disbursements for Quarter 3 of Year 1?