FIN302 Investment Selection

Intro It is December 2022. You work as a financial analyst for Merck & Co. and are tasked with the due diligence on the proposed acquisition of a biotech startup. You estimated the following cash flows for the startup: Year 2023 2024 2025 2026 2027 After 2027, cash flows are expected to grow by 3% per year. Based on the riskiness of your industry, you think that your weighted average cost of capital is 16%. Submit The biotech firm has 5 million shares and bonds worth $120 million outstanding. 0+ decimals Part 1 What is the terminal value, i.e., the present value of all free cash flows from 2028 to infinity expressed in 2027- dollars (in $ million)? Submit Expected free cash flow ($ million) (end of year) 65.5 0+ decimals 98.25 127.73 153.27 168.6 Part 2 What is the total value of the company (in $ million)? Submit 0+ decimals Part 3 What is the value per share of common stock (in $)?

“The boom in IPO activity has been mainly credited to the surge in SPACs (special purpose acquisition vehicles). In the first two months of 2021, Nasdaq ushered in as many SPAC IPOs as we did in all of 2020” said a Nasdaq representative and many of them were health care companies. Use public resources and comment on the following: What drives the IPO volume/deals in the U.S.? Globally?

ANSWER ALL QUESTIONS A M&M Micro Processors Ltd is in process of purchasing high-tech Equipment for its production of microchips for the electronic industry. In its search, it has gathered the following information about two possible Equipment A and B. Both Equipment will be able to provide benefits over a ten-year period, and each required an investment of $10 000. Management has constructed the following table of estimates of rate of return and probabilities for Pessimistic, most likely and optimistic results. Equipment A Equipment B Rate of Return Rate of Return 11% 9% 18% 18% 22% 25% State of nature Recession Normal Boom I. II. Probability IV. 0.30 0.45 0.25 Table 1. Probability Required: Compute the expected rate of return for each Equipment Compute the variance and standard deviation of the rate of return for each Equipment Coefficient of variation for each Equipment Recommend which Equipment the firm should purchase 0.30 0.45 0.25

Need help with this question

I need this question completed in 10 minutes

Sub : FinancePls answer  very fast.I ll upvote correct answer . Thank You ( dont use CHATGPT ) A company is planning to introduce a new product in near future. In order to have sufficient money for investment, it plans to save some equal amounts every six months for the next five years. In the fifth year the company acquires patent rights to the new product by investing $1000000. However, the manufacturing of the new product is expected to initiate in the second quarter of the seventh year with an investment of $10000 and an increase of $1000 per quarter for the next six quarters. If the interest rate is 10% compounded semi-annually during the first two years, 12% compounded semi-annually for the next three years, 13% compounded quarterly for the following two years and 16% compounded quarterly thereafter, calculate the money to be invested.

Please help me

Maram and Company should proceed with the project. True False

The Doodad Company This case was developed by Rakesh Pandey, revised August 2021, February 2022 and August 2022 A Core project team has named their company, The Doodad Company (TDC) and they will be making doodads, also called gadgets, for their project. It is still early in the project, but the team has worked hard to gather data to start building their business model. Their objective is to have a one-year model for profit to present at the Business Development Workshop that will be coming up in a couple of weeks. Based on their preliminary interviews, the TDC team has determined that their likely retail price is going to be $10, and they have estimated their segment size to be about 10 million customers. While the team has not reviewed the BASES sales forecasting model in detail in marketing yet, they have been provided with some place holders for the year being considered (Year 2). The place holder values are as follows: Purchase Intent (PI) 15% Awareness 15% Distribution (ACV) 15 %…

A financial services company is considering a new investment in a new technology platform for investment management. The company has identified a fintech startup that is seeking funding at a valuation of $5 million. The company expects to receive a dividend of $200,000 per year over a five year term and sells it equity stake at a valuation of $10 million. What is the expected return on investment if the financial services company invests $2 million in the fintech startup

Need help with both questions

Finance John and John Plc. is a midsized electronics manufacturing company in the West of Scotland. You have recently joined as a finance manager at John and John. Last week, the marketing manager brought a new project to your attention. This project is about manufacturing robot vacuum cleaners ETX600 with an expected product life cycle of 4 years. In 2019, John and John Plc plans to launch these new vacuum cleaners if the project is financially feasible. Research and development costs incurred in the past three years amount to £150,000. Advertising is expected to cost £25,000 in year 1. Advertising costs will reduce by 10% every year thereafter. The company expects that sales in the first year will be £800,000, second and third year sales will be £650,000 and sales in the fourth year will be £600,000. Variable costs will be 50% of sales each year and the fixed production cost is expected to be £100,000 per year. The company estimates that if these new robot vacuum cleaners are…

Hello, please help me on this practice question! Thank you!

What is the value of 'FREE CASH FLOW' in the year 2021? Rs. 1.23 million Rs. 2.95 million Rs. 3.95 million Rs. 5.04 million

Joe is a new investor and has been closely watching a company by the name of USA Ltd., a pharmaceutical company aiming to develop a coronavirus vaccine. Joe believes the following returns are possible in 2022 and has attached a probability to each potential outcome:     Probability Possible Return .20 185.00% .30 83.50% .30 -5.00% .20 -100.00%   a) Calculate the Expected Return for USA Ltd. in 2022.      Show formula, calculation and a concluding statement in your response.

Background Hyde Park Technologies Pty Ltd (HPT), a medium-sized enterprise with a turnover of $100 million per year is considering the purchase of an ERP system. As they have an urgent need to update their accounting system, they plan on purchasing an ERP financial module as the first step and then over time, they plan on integrating this module as part of a larger ERP rollout through the company. Eileen Dover, the CEO of HPT recently issued a request for proposal (RFP) to a number of ERP vendors. To assist the vendors in the preparation of their responses, Eileen has provided the following information: . HPT was founded by Eileen's father (Hans Dover) in 1986. Even though Hans is now in his 70s, he still plays an important figurehead role in the company and will have influence in the choice of vendor. Eileen has emphasised that whilst the presentation materials be to a high professional standard, it is imperative that they clearly and simply articulate the "Hansefits" of the new…

I need the answer as soon as possible

Eonomics Continued Question Q1-Q6. Suppose a startup requires financing of 5 million dollars and it is raised in two rounds. The 1st round VC provides 3 million dollars now and the discount rate is 60%. The 1st round VC’s investment period is four years. The 2nd round VC provides 2 million dollars in year 2. The 2nd round VC’s investment period is two years and the discount rate is 50%. The startup is expected to earn 4 million dollars in year four and should be comparable to companies with PE ratio of 25. The Round 1 VC’s current % ownership is 20.6% and the Round 2 VC’s current % ownership is 4.5%. Shares outstanding before Round 1 was 1,000,000 shares. (On some questions, your answer may include a dollar sign, or a percent sign. You should not include these symbols in your answer.) Q1. How many new shares VC should purchase at 1st round? (Round the result to the nearest whole number) Q2. How much shares outstanding before Round 2? Q3. How many new shares round 2 VC should purchase…

klp.1

s of Dec 01, 2020, Pfizer announced that the Federal Drug Administration has approved its new vaccine, COVID-19 VAC, for the treatment of Corona Virus. Imagine that you were working as a stock analyst for a large investment firm and Pfizer is one of the firms you are actively watching. On Dec 01, 2020, Pfizer’s stock price jumped rapidly, and your supervisor wants you to estimate the size of the cash flows necessary to support the jump in stock price. Therefore, he wants you to estimate the net cash flows the market had anticipated from the sale of the newly developed vaccine. He advises that you treat the value anticipated by the market as the NPV of selling the vaccine, then work backward from the NPV to determine the annual cash flows necessary to generate that value. Your supervisor thinks the best way to capture the value is to take the change in stock price from closing on 30th November 2020 to closing on 1st December 2020. Being a smart worker, you just smiled at your boss,…

Minicase In March 2020, the management team of Londonderry Air (LA) met to discuss a proposal to purchase five shorthaul aircraft at a total cost of $25 million. There was general enthusiasm for the investment and the new aircraft were expected to generate an annual cash flow of $4 million for 20 years.  The focus of the meeting was on how to finance the purchase. LA had $20 million in cash and marketable securities (see table), but Ed Johnson the chief financial officer pointed out that the company needed at least $10 million in cash to meet normal outflow and as a contingency reserve. This meant that there would be a cash defficiency of $15 million, which the firm would need to cover either by the sale of common stock or by additional borrowing. while admitting that the arguments were finely balanced, mR. Johnson recommended an issue of stock. He pointed out that the airline industry was subject to wide swings in profits and the firm should be careful to avoid the risk of excessive…

Please help me with this question

Questior The Bornova Innovation Company has three emerging technology options to invest. The mvestment options and market conditions for these technologies are given below. Based on this information; Investment Options Market Conditions Investment Revenue Emerging Technology Cost Demand Forecasting Probability (1000TL) (1000TL) Strong 0.6 9000 A 8000 Weak 0.4 6000 Strong 0.7 8000 В 6500 Weak 0.3 5000 Strong 0.8 6000 5000 Weak 0.2 3000 a. Draw the decision tree, b. Find the expected monetary value (EMV) of each options c. Which technology option should be selected? Why?

(This question has two parts.) It is 2022. You are investigating the possibility of making an equity investment in Walkerville Woodworking Inc., a firm that specializes in producing antique-style furniture with a modern twist. Your research has revealed the following information: • Walkerville has $8 million in excess cash and $4.5 million in debt. • The company is expected to have free cash flow of $28 million in 2023 and $35 million in 2024. • Beyond 2024, free cash flow is expected to grow at a constant rate of 2% per year forever. • Walkerville's weighted average cost of capital (WACC) is 11% and it has 9 million shares outstanding. Question Ax What is the current enterprise value of Walkerville Woodworking given the above assumptions? OA. $375.58 million OB. $349 14 million OC. $4141 million OD. $379.08 million OE. $340.86 million Question B What should be the price of one share of Walkerville stock? OA. $46.40 OB. $41.34 OC. $42.12

5

Question 3 A venture capital fund is considering investing in a startup that is seeking to raise $1,500,000 in equity capital. The venture had previously raised $250,000 from angel investors and the founder had invested $50,000 of her savings in her venture. At the time this investment was under consideration, the company was projecting to be profitable three years from now. Net income in year three is projected to be $225,000. Because of projected losses in year one and two, cumulative retained earnings entering year three are projected to be negative $120,000. The venture capital firm will nbt invest unless the projected return on equity in year three is at least 30% If you were employed by the venture capital fund, based on this information alone, would you recommend that the $1,500,000 investment be made? Yes, the projected return on equity in year three is greater than 30% No, the projected return on equity in year three is less than 30%

4 a. Shimada Products Corporation of Japan is anxious to enter the electronic calculatormarket. Management believes that in order to be competitive in world markets, theprice of the electronic calculator that the company is developing cannot exceed $15.Shimada’s required rate of return is 12% on all investments. An investment of$5,000,000 would be required to purchase the equipment needed to produce the300,000 calculators that management believes can be sold each year at the $15 price.Required:Compute the target cost of one calculatorb. Poskey Corporation uses an activity-based costing system with three activity costpools. The company has provided the following data concerning its costs and itsactivity based costing system:Costs:Wages and salaries ............ $400,000Depreciation ...................... 160,000Utilities .............................. 100,000Total ................................... $660,000Distribution of resource consumption:Activity Cost PoolsAssembly Setting Up…

Following the outbreak of the Novel Coronavirus (COVID 19), CPC a pharmaceutical companyis considering introducing a new vaccine unto the market to help fight the virus. This will requirethe injection of huge capital to the tune of GH¢40,000,000 for the purchase of the equipment forproduction. It will cost CPC an additional GH¢ 5,500,000 to set up the production facility andinstall that equipment for production. Mr. Smart, the CEO of CPC believes that the vaccine couldbe manufactured in a building owned by the firm and located in East Legon. This vacant buildingand the land can be sold for GH¢ 1,500,000 after taxes. CPC will finance the production of the

Calculate the viability of the project based on Net Present Value & mention any concerns

Please help me

Math introduction As the manager of a company you wish to invest in a new machine, which costs € 4 million. The annual interest rate is 6%. The expected increase in revenue from the new machine in 2025 and 2026 is € 1,700,000 and € 1,500,000, respectively. The expected increase in revenue in 2027 is highly uncertain. How much must the increase in revenue in 2027 be at least to break even, given the data above? O Between € 800,000 and € 1,000,000 O Between € 1,600,000 and € 1,800,000 O Between € 1,200,000 and € 1,400,000 Between € 1,400,000 and € 1,600,000 O Between € 1,000,000 and € 1,200,000

1. Enter your answers into the box below. Make sure you label your answers using 1, 2,..., etc.    XYZ Co has two  investments X and Y. Investment X has an initial capital outlay of $500 million, and the investment is expected to generate $1200 million in nine years. Investment Y has an initial capital outlay of $200 million, and the investment is expected to generate $450 million in nine years.  Assume XYZ has a cost of capital of 10%. 1.  Determine the internal rate of return of Investment X and  Investment Y. Should X and Y be taken? 2.  Determine the net present value of Investment X and Investment Y.  Should X and Y be taken?     2. Enter your answers into the box below. Make sure you label your answers using 1, 2,..., etc.   XYZ Co is considering to purchase equipment that has 12 years of life and requires an initial capital outlay of $240 million.  The equipment will be depreciated using straight line method to zero book value in 12 years.  The salvage value  of the equipment is…