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Matta Manufacturing is trying to decide between two different conveyor belt systems. System A costs $212,000, has a four-year life, and requires $68,000 in pretax annual operating costs. System B costs $300,000, has a six-year life, and requires $62,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 30 percent and the discount rate is 9 percent.Matta Manufacturing is trying to decide between two different conveyor belt systems. System A costs $212,000, has a four-year life, and requires $68,000 in pretax annual operating costs. System B costs $300,000, has a six-year life, and requires $62,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 30 percent and the discount rate is 9 percent. Calculate the EAC for both conveyor belt systems.
Calculate the sensitivity of the OCF to changes in the quantity sold.
An outdoor swimming pool operates during the summer months in the Midwest for 14 weeks. Water in the pool is heated to maintain a constant temperature using a natural gas heater. An electric pump is used to circulate water in the pool and is used onl..
Finch Corporation distributes property (basis of $225,000, fair market value of $300,000) to a shareholder in a distribution that is a qualifying stock redemption. The property is subject to a liability of $160,000, which the shareholder assumes. The..
Depreciation Advantage: What is the basic advantage of depreciation?
Jones and Clark entered into a written contract for the purchase of an apartment building by Clark. The contract was carefully drafted to set forth the agreement of the parties. It was signed by both parties. Clark subsequently claimed that the contr..
How many months from now should the final payment be made?
Wilson, Inc., has a project with an expected cash inflow of $1 million at the end of Year 5. Wilson has a second project with an expected cash inflow of $200,000, to be received at the end of each year for the next five years. Required: If both proje..
When calculating the risk of a portfolio, you should adjust the process by the covariance, or interrelationship, of security price dispersion. When calculating the risk of a portfolio, you should add the weighted average of the standard deviation of ..
what is the resulting NPV to Drug Revolution under the base case scenario?
What will be your cash flow in year 1? What will be your real rate of return over the two-year period?
Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $66.60 a share with an annual dividend of $3.25 a share. Ignoring flotation costs, what is the company's cost of preferred stock, Rps?
Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores,
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