Problem 01: Assume monetary benefits of an XYZ company of $50,000 the first year and increasing benefits of $15,000 a year for the next five years (year 1 = $65,000, year 2 = $80,000, year 3 = $95,000, year 4 = $110,000, year 5 = $125,000). One-time development costs were $35,000 and recurring costs were $20,000 over the duration of the system’s life. The discount rate for the company was 13 percent. Using a six-year time horizon, calculate the net present value of these costs and benefits. Also calculate the overall return on investment and then present a break-even analysis. At what point does breakeven occur?

Examine the following book-value balance sheet for university products inc. the preferred stock currently sells for $30 per share and pays a dividend of $3 a share. the common stock sells for $16 per share and has a beta of 0.9. there are 2 million common shares outstanding. the market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. book-value balance sheet (figures in $ millions) assets liabilities and net worth cash and short-term securities $ 2.0 bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 8%) $ 5.0 accounts receivable 3.0 preferred stock (par value $15 per share) 3.0 inventories 7.0 common stock (par value $0.20) 0.4 plant and equipment 21.0 additional paid-in stockholders’ equity 13.6 retained earnings 11.0 total $ 33.0 total $ 33.0 a. what is the market debt-to-value ratio of the firm? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.) b. what is university’s wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)