Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 31, Problem 13P
Assume that in the original Ityesi example in Table 31.1, all sales actually occur in the United States and are projected to be $60 million per year for four years. Keeping the cost of sales, operating expenses, capital expenditures and depreciation expenses unchanged (and in pounds), and assuming the tax rate remains at 40%, calculate the
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A company requires a 26% internal rate of return (before taxes) in U.S. dollars on project investments in foreign countries. Solve, a. If the currency of Country A is projected to average an 8% annual devaluation relative to the dollar, what rate of return (in terms of the currency there) would be required for a project? b. If the dollar is projected to devaluate 6% annually relative to the currency of Country B, what rate of return (in terms of the currency there) would be required for a project?
Example
The investment in a new product requires a capital expenditure of € 45,000.-. The economic life time is
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amounts to € 200.-. The internal interest rate (= WACC) is 10% and the number of selling units are
300/year. What is the minimum sales price/unit (x), which ensures the required profitability of the
investment?
Use
a) the NPV method
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A project is expected to result in an $4 million increase in sales and $2 million increase in expenses, per year. What is the annual incremental after-tax cash flow (OCF) associated with the project if the firm's tax rate is 32% and the incremental depreciation is $1 million per year.
Enter answer in dollars, rounded to the nearest dollar.
Chapter 31 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 31.1 - Prob. 1CCCh. 31.1 - What implication do internationally integrated...Ch. 31.2 - Prob. 1CCCh. 31.2 - When do these two methods give the same NPV of the...Ch. 31.3 - Prob. 1CCCh. 31.3 - Prob. 2CCCh. 31.4 - Prob. 1CCCh. 31.4 - Prob. 2CCCh. 31.5 - What conditions cause the cash flows of a foreign...Ch. 31.5 - Prob. 2CC
Ch. 31 - You are a U.S. investor who is trying to calculate...Ch. 31 - Mia Caruso Enterprises, a U.S. manufacturer of...Ch. 31 - Etemadi Amalgamated, a U.S. manufacturing firm, is...Ch. 31 - Prob. 4PCh. 31 - You work for a U.S. firm, and your boss has asked...Ch. 31 - Prob. 6PCh. 31 - Prob. 7PCh. 31 - Prob. 8PCh. 31 - Prob. 9PCh. 31 - Prob. 10PCh. 31 - Prob. 11PCh. 31 - Prob. 12PCh. 31 - Assume that in the original Ityesi example in...
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