MC – Seller of Forward Contract
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What does the seller of a forward contract agree to do?
What does the seller of a forward contract agree to do?
Given the annual lease payments and the tax rate, determine the annual tax shield from the lease payments.
Your numbers will vary.
Concept only: The value of a bond = ______ – ___________. You are given asset value, call option on assets, default-free bond, and value of put option on assets. What are words that would fit into the above?
We can think of the value of a corporate bond as Bond value without default +/- ______.
Determine the value of a futures contract on the Standard and Poor’s Index given the current level of the index, the dividend yield, and the risk-free rate.
Your numbers will vary.
Given the investment amount in a new plant, expected life, expected sales, fixed costs, variable costs, price per jar, depreciation years, opportunity cost of capital, and the tax rate… calculate the NPV given slight changes in variable and fixed costs.
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Determine the NPV of the sluffing machine if all variables are as expected, and compute the NPV under the worst-case scenario where sales units, as well as the price, could fall.
Your numbers will vary.
They give you the amount diamonds are sold for, the cost of materials, fixed costs, machinery costs, and depreciation and ask you to find both the accounting break-even sales and NPV break-even sales.
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Determine the accounting break-even level of sales as well as the NPV break-even level of sales.
Your numbers will vary.
Given the number of burgers that will be produced, determine the fixed costs, variable costs, and the average cost per burger.
Your numbers will vary.