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Problem: Marston Ltd is considering manufacturing a new product. This requires machinery costing £50,000 with a life of five years and terminal value of £6,000. Profit from the project will be £15000 per annum. An investment of working capital of £9,000 will be required for the duration of the project. Tax allowances on the machine are at 25% per annum reducing balance. At the end of the project life, a balancing charge or allowance will arise equal to the difference between the scrap proceeds and the tax written down value. Tax is payable at a rate of 35%. Tax cash flows on profits occur in the same year as the profits giving rise to the tax charge. The cost of capital is 12%. Required (1) Calculate capital allowance and tax savings for each of the years. (2) Calculate net cashflow of the projects for each of the years. (3) Calculate NPV and suggest should the project be accepted.
Write down the meaning behind each symbol you put to the list - calculate the option premium for each contract and calcuate the instrinsic value, time value for each contract
Suppose you put off making investments for the first 5 years, and instead made deposits of $50 a month for 25 years into an account earning 8% compounded monthl
Camembert's commercial paper is currently selling at a discount. It sells for 98.36 of par and matures in 85 days. 3. Calculate its yield as quoted in the marke
as a manager of a firm you are concerned about a potential increase in interest rates which would reduce the demand for
A firm borrowed $1,500,000 from National Bank. The loan was made at a simple annual interest rate of 9% a year for 3 months. A 20% compensating balance requirement raised the effective interest rate.
Why traditional financial assets have negative exposure to event risk, while commodities generally have positive exposure to event risk?
Summit Record Company is negotiating with two banks for a $100,000 loan. Fidelity Bank requires a 20 percent compensating balance, discounts the loan.
you observed the bid rate of a new zealand dollar is .332 while the ask rate is .334 at bank x. the bid rate of the new
Vatika Group paid Rs90,000, in cash, for a piece of equipment three years ago. Last year, the company spent Rs10,000 to upgrade the equipment with the latest.
What is the normal profit per offer of stock An one year from now?What will be the joined impact of the accompanying on the value per offer of stock ?
Trivoli Industries plans to issue some $100 par preferred stock with an 11 percent dividend. The stock is selling on the market for $97.00, and Trivoli must pay flotation costs of 5 percent of the market price. What is the cost of the preferred stock..
Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 7%. If the firm's tax rate is 30%, compute the WACC?
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