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Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time. (Amusement parks need to rotate exhibits to keep people interested.) If the project sells the company will recoup all gains from the sale of the exhibit. It is expected to increase net annual cash flows by $27,900. The company's borrowing rate is 8%. Its cost of capital is 10%. Its tax rate is 20%. The exhibit will be depreciated using 5 year straight line depreciation with the half year convention. Calculate the net present value of this project to the company.
What is the semiannual payment to finance $200,000 in a sinking fund that pays 12% annual interest. Also, calculate the total deposits of the sinking fund and the interest earned by the semiannual payment.
Triplin Corporation's marginal tax rate is 35%. It can issue 10-year bonds with an annual coupon rate of 7% and a par value of $1,000. After $12 per bond flotation costs, new bonds will net the company $966 in proceeds
The financial manager of the firm is considering two choices regarding dividends: i. Paying out all earnings as dividends, or ii. Starting from year 0, investing 20% of its earnings each year in projects which earn..
In 2013, Lisa and Fred, a married couple, have taxable income of $300,000. If they were to file separate tax returns, Lisa would have reported taxable income of $125,000 and Fred would have reported taxable income of $175,000.
Suppose a German company issues a bond with a par value of 1000, 15 years to maturity, and a coupon rate of 7.7 percent paid annually. If the yield to maturity is 8.8 percent, what is the current price of the bond
Your current supervisor has asked for your assistance with shredding some office documents. You have some understanding of the records retention policy for your company
Center seats 15,600 people. Last night at the Celtics game 13,280 were in attendance. Total attendance for the season was 339,890. Assuming a 25-game home schedule, what is the average attendance per game
You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $13.0 million, which will be depreciated straight-line to zero over its four-year life.
Wine and Roses, Inc. offers a 8 percent coupon bond with semiannual payments and a yield to maturity of 8.73 percent. The bonds mature in 8 years. What is the market price of a $1,000 face value bond
Liquidity premiums of 0.5% and default risk premiums of 0.85% are standard. What would be the nominal return on a 10 year Treasury bond and a corporate bond with the same maturity
Six months ago, you invested $350,000 to become a partner in a medical practice in which you have a 50% ownership interest. Today, your partner defaulted on the payments for a $2 million Open MRI system that is used by the partnership.
Prepare an amortization schedule for a five-year loan of $60,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year
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