Business, 20.12.2019 18:31 dannyboy938

Zoso is a rental car company that is trying to determine whether to add 25 cars to its fleet. the company fully depreciates all its rental cars over five years using the straight-line method. the new cars are expected to generate $190,000 per year in earnings before taxes and depreciation for five years. the company is entirely financed by equity and has a 38 percent tax rate. the required return on the company’s unlevered equity is 10 percent, and the new fleet will not change the risk of the company. the risk-free rate is 6 percent.
a. what is the maximum price that the company should be willing to pay for the new fleet of cars if it remains an all-equity company? (do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16))
b. suppose the company can purchase the fleet of cars for $500,000. additionally, assume the company can issue $470,000 of five-year debt at the risk-free rate of 6 percent to finance the project. all principal will be repaid in one balloon payment at the end of the fifth year. what is the adjusted present value (apv) of the project?

Answers: 2

Show answers

Other questions on the subject: Business

Business, 22.06.2019 01:00, Travon1418

Azster inc. recorded sales revenue for the year that ended december 31, 2014 as $67,000. interest revenue of $5,300 and expenses of $14,000 were also recorded for the same period. what is aster’s net profit or loss?

Answers: 3

continue

Business, 22.06.2019 11:10, AM28

Your team has identified the risks on the project and determined their risk score. the team is in the midst of determining what strategies to put in place should the risks occur. after some discussion, the team members have determined that the risk of losing their network administrator is a risk they'll just deal with if and when it occurs. although they think it's a possibility and the impact would be significant, they've decided to simply deal with it after the fact. which of the following is true regarding this question? a. this is a positive response strategy. b. this is a negative response strategy. c. this is a response strategy for either positive or negative risk known as contingency planning. d. this is a response strategy for either positive or negative risks known as passive acceptance.

Answers: 2

continue

Business, 22.06.2019 12:00, dwilburn01

Simon, aged 10, is invited to a classmate's birthday party at an exclusive ski resort on march 15th. the day will include 4 hours of snowboarding, lunch and birthday cake. simon's mother checks a box on the invitation that says "yes, we will attend" and returns it to the classmate's address. unfortunately, they later don't attend the party when simon comes down with the flu. on march 17th, simon's mother receives an invoice in the mail from simon's classmate for $35 that says, "party no-show fee." can simon's classmate collect the fee?

Answers: 3

continue

Business, 22.06.2019 21:30, girlhooper4life11

Suppose that alexi and tony can sell all their street tacos for $2 each and all their cuban sandwiches for $7.25 each. if each of them worked 20 hours per week, how should they split their time between the production of street tacos and cuban sandwiches? what is their maximum joint revenue?

Answers: 3

continue

You know the right answer?

Zoso is a rental car company that is trying to determine whether to add 25 cars to its fleet. the co...