A company is looking to invest in new machinery. The cost of the machinery, including shipping and installation costs, is $34.75 million. The company has estimated that revenues will increase to $38.9 million in each of the next three years if the machinery is purchased. Costs (both variable and fixed) are also expected to increase to $10.2 million in each of the next three years. The company uses a standard straight-line depreciation method. In particular, the company will straight-line depreciate the machinery to $7.8 million over the three year life of the project. If the marginal tax rate is 39%, what will the differential cash flows be in each of the next three years

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Bill dukes has $100,000 invested in a 2-stock portfolio. $62,500 is invested in stock x and the remainder is invested in stock y. x's beta is 1.50 and y's beta is 0.70. what is the portfolio's beta? do not round your intermediate calculations. round the final answer to 2 decimal places.

Describe the three different ways the argument section of a cover letter can be formatted