Oakdale Community Hospital is considering building an ambulatory surgery center. Which of the following opportunity cost rates would be most appropriate for discounting the project's future cash flows? The expected rate of return on a bank CD The expected rate of return on a municipal bond The expected rate of return on the stock of SurgiCare Corporation, a for-profit company that operates a large number of freestanding ambulatory surgery centers The expected rate of .... Read More

Answer these three questions:(a) What is meant by the present value of growth opportunities (PVGO)? What is its role in the valuation of a publicly listed company?(b) A stockâ€™s next dividend is $5 and this dividend is expected to grow indefinitely at 5%. If the market price expects a 9% rate of return what is value of the stock today? If the stock earnings per share is $9 what part of the price of the stock is due to assets in place and what part is due to growth opportunities?(c) Can .... Read More

The Fall of EnronThe collapse of energy giant Enron in 2001 showed how catastrophic the agency problem can be. The company's officers and board of directors, including Chairman Kenneth Lay, CEO Jeffrey Skilling and CFO Andy Fastow, were selling their Enron stock at higher prices due to false accounting reports that made the stock seem more valuable than it truly was. After the scandal was uncovered, thousands of stockholders lost millions of dollars as Enron share values plummeted. .... Read More

Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.Over lunch, you and Mary meet to discuss next steps with the expansion project.â€œDo we have everything we need on sales and costs?â€ you ask. â€It must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apix expansion project.â€â€œWe have the data from James and Luke regarding projected sales .... Read More

PROBLEMS 1. Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moodyâ€™s credit rating Aa Baa Fixed-rate borrowing cost 10.5% 12.0% Floating-rate borrowing cost LIBOR LIBOR 1% Calculate the quality spread differential (QSD). Develop an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs. Assume Alpha desires floating-rate debt and Beta desires fixed-rate debt. No swap bank is involved in this .... Read More

We are evaluating a project that costs $670,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 59,000 units per year. Price per unit is $44, variable cost per unit is $24, and fixed costs are $760,000 per year. The tax rate is 35 percent, and we require a 18 percent return on this project. a.Calculate the accounting break-even point. (Do not round intermediate calculations and round your .... Read More

Capital Budgeting Analysis You are required to work the following problem, using a discounted cash flow (NPV) analysis. You should model your answer on the text approach in Chapter 8. â€œGordon Hall is considering replacing an old machine with a new one from Li Ho. The old machine (bought 5 years ago from Tom Lee) cost $340,000, while the new one will cost $280,000, fully financed by a 5 year 9% per annum interest only loan. â€œThe new machine will be depreciated prime cost to .... Read More

You have finally saved $10,000 and are ready to make your first investment. You have the three following alternatives for investing that money: Bank of Canada bonds with a par value of $1,000, that pays a 6.35% on its par value in interest, sells for $1,020, and matures in 5 years. Southwest Bancorp preferred stock paying a dividend of $2.63 and selling for $26.25. Emerson Electric common stock selling for $52, with a par value of $5. The stock recently paid a $1.60 dividend and the .... Read More

Submit all answers in a single Excel file.Holly Manufacturing Case Study Holly Manufacturing Company produces two cello models. One is a standard acoustic cello that sells for $600 and is constructed from medium-grade materials. The other model is a custom-made amplified cello with pearl inlays and a body constructed from special woods. The custom cello sells for $900. Both cellos require 10 hours of direct labor to produce, but the custom cello is manufactured by more experienced workers .... Read More

Please see the attached word document Document Preview: Homework 8 Q1. Suppose you are managing a stock portfolio that is currently valued at $2,000,000. You expect the stock market will be bullish in the next 3 months. But you are also aware of a small chance of market crash and you want to insure that your portfolio value will be at least $1,700,000 in 3 months no matter what happens to .... Read More