The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $51,000. The annual cash flows have the following projections. Year Cash Flow
1 $20,000
2 23,000
3 27,000
4 13,000
5 8,000
a. If the cost of capital is 12 percent, what is the net present value of selecting a new machine?
b. What is the internal rate of return?
c. Should the project be accepted?
X-treme Vitamin Company is considering two investments, both of which cost $20,000. The cash flows are as follows:
Year Project A Project B
1 $23,000 $20,000
2 10,000 9,000
3 10,000 15,000
Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
a-1. Calculate the payback period for Project A and Project B.
a-2. Which of the two projects should be chosen based on the payback method?
a) Project A
b) Project B
b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 8 percent.
b-2. Which of the two projects should be chosen based on the net present value method?
a) Project B
b) Project A
c. Should a firm normally have more confidence in the payback method or the net present value method?
a( Payback method
b) Net present value method

Which type of investment offers both capital gains and interest income? a. property b. cds c. stocks d. bonds

Calculate the cost of each capital component—in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). use both the capm method and the dividend growth approach to find the cost of equity.calculate the cost of new stock using the dividend growth approach.what is the cost of new common stock based on the capm? (hint: find the difference between re and rs as determined by the dividend growth approach and then add that difference to the capm value for rs.)assuming that gao will not issue new equity and will continue to use the same target capital structure, what is the company’s wacc? e. suppose gao is evaluating three projects with the following characteristics.each project has a cost of $1 million. they will all be financed using the target mix of long-term debt, preferred stock, and common equity. the cost of the common equity for each project should be based on the beta estimated for the project. all equity will come from reinvested earnings.equity invested in project a would have a beta of 0.5 and an expected return of 9.0%.equity invested in project b would have a beta of 1.0 and an expected return of 10.0%.equity invested in project c would have a beta of 2.0 and an expected return of 11.0%.analyze the company’s situation, and explain why each project should be accepted or rejected g

Match the terms with the appropriate definition. 1. work done for pay job 2. series of related jobs based on knowledge, training, tasks performed, interests, and experience career 3. buying or selling products and services using the internet mediation 4. wage amount after deductions are withheld net wage 5. a way a person chooses to live his or her life e-commerce 6. the people who are both able and willing to work technology 7. unequal treatment of others based on a bias concerning a person’s characteristics such as race, religion, gender, or age discrimination 8. the act of sharing information lifestyle 9. the use of a third party to make suggestions workforce 10. knowledge and tools used to perform tasks communication