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Barnes Company purchases a machine for $500,000. The machine has an expected life of 10 years and no salvage value. The company anticipates a yearly after-tax net income of $30,000 to be received uniformly throughout each of the ten years. Calculate the accounting rate of return?
Justin Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows:
End of year Machine A Machine B
1 $5,000 $1,000
2 $4,000 $2,000
3 $3,000 $12,000
Justin Manufacturing uses the net present value method to make the decision, and it requires a 15% annual return on its investments. The present value factors of 1 at 15% are: 1 year, 0.8696; 2 years, 0.7561; 3 years, 0.6575. Which machine should Justin purchase and why? Hint: This is a two-part question. Part 1. Make sure you calculate the NPV for both machines and Part 2. Which machine should the company invest in and why?
Which of the following events would make it more likely that a company would call its outstanding callable bonds?
Identify the clients complex broking needs - Develop complex broking options and developing and nurturing relationships with clients, other professionals and third party referrers
Provide detailed explanation / discussion of the Efficient Market Hypothesis (EMH) and its implications in corporate finance.
The Smith Company has two different bonds currently outstanding. Bond A has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and fina..
Hayden Inc. has a number of copiers that were bought four years ago for $33,000. Currently maintenance costs $3,300 a year, but the maintenance agreement expires at the end of two years and thereafter the annual maintenance charge will rise to $9,300..
What is the true initial cost figure the company should use when evaluating its project?
A successful joint venture is expected to result in the 4.0% growth rate until 2000 but would increase the company’s normal growth rate to a constant 8.00% after that time. The joint venture also is expected to increase investors’ required return to ..
Analyze the 10-year, 8% coupon rate (semi-annual payment), $1,000 par value bond. The bond currently sells for $1,318. What’s the bond’s yield to maturity?
If the inflation rate was 3.6 percent over the past year, what was your total real return on investment?
To what extent do you agree or disagree with the following statement on a scale of 1 to 5 where 1 = strongly disagree and 5 = strongly agree. Please explain your answer. "Systematic risk can be eliminated through diversification"
What is the value of a 1-year European call option with a strike price of $50?
Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Under which form of financing is Tom likely to work harder?
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