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?

Which of the following accurately describes one way that individual goods differ from public goods? a. people can be excluded from using individual goods if they don't pay. b. all individual goods are normal goods. c. demand for individual goods is always inelastic. d. consumer rivalry results in decreasing marginal utility for individual goods.2b2t

Colah company purchased $1.8 million of jackson, inc. 8% bonds at par on july 1, 2018, with interest paid semi-annually. when the bonds were acquired colah decided to elect the fair value option for accounting for its investment. at december 31, 2018, the jackson bonds had a fair value of $2.08 million. colah sold the jackson bonds on july 1, 2019 for $1,620,000. the purchase of the jackson bonds on july 1. interest revenue for the last half of 2018. any year-end 2018 adjusting entries. interest revenue for the first half of 2019. any entry or entries necessary upon sale of the jackson bonds on july 1, 2019. required: 1. prepare colah's journal entries for above transaction.

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.