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Case: Your company is upgrading to more efficient production equipment for your firm's only product. This upgrade was based on the recommendations of a consulting firm the company hired at a cost of $34,400. The new equipment will cost $1,975,000 and shipping costs of $32,100 will be incurred. Because the industry is changing rapidly, the equipment will be obsolete in 4 years so there will be no salvage value. The new equipment will allow you to make more of your product in the same amount of time. As a result your total sales will increase by $400,000 annually and expenses will decrease by $260,000 annually. Because your production will be increasing, inventory levels will need to be increased by $40,000 and accounts receivable will also increase by $30,000. Rather than paying your suppliers within 10 days, you will move to 30 day payments which will increase accounts payable by $20,000. The equipment will be depreciated for tax purposes at CCA rate of 20%. The company's tax rate is 40% and the company requires a rate of return of 7% on all capital expenditure projects. Assume the Accelerated Investment Incentive applies.
Determine the present value of the CCA tax shield (PVCCATS).
A stock that currently trades at $10 has a beta of 1.6. The risk-free interest rate for the is 10%, and the market price of risk is expected to be 5%.
What is the Sharpe ratio of a portfolio with 40 percent of the funds in ABC and 60 percent in XYZ?
Regarding "Betting on Failure: Profiting from Defaults on Subprime Mortgages" (Kellogg)
How much will accumulate at the end of 10 years if $700 is deposited in the bank at the end of each six months, with the first deposit 6 months from now.
Ruby Hospital has a target capital structure of 35 percent debt and 65 percent equity. Its cost of equity (fund capital) estimate is 13.5 percent
Assume that the 60-day payment terms that you gave your buyer are typical, and that you will be required to carry up to $2,500,000.00 per month in accounts receivable for export sales. To be able to produce inventory for additional sales while..
You are helping a manufacturing firm decide whether it should invest in a new plant. The initial investment is expected to be $ 50 million.
One reason that the knowledge of the history of management is important is to?
A stock had the following prices and dividends. What is the geometric average return on this stock?
The activity cost rates are as follows: ordering $100 /po, del. & receipt of merchandise $80 / del., Shelf stocking $ 20 /hr, cs $.20 / item sold.
However, corporate costs would still be $315,000 in total. If the Eastern Division is eliminated, what would be the resultant overall company net income(loss)?
Problem - Assume an investor purchased six-month commercial paper with a face value of $1 million for $940,000. What is the yield
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