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Pierre Imports is evaluating the proposed acquisition of new equipment at a cost of $900,000. In addition the equipment would of $50,000 plus shipping costs of $10,000. The equipment falls into the MACRS 3-year class, and will be sold after 3 years for $100,000. The equipment would require increased net working capital of 60,000. The equipment is expected to save the company $70,000 per year in before-tax operating costs. The company's marginal tax rate is 35 % and its cost of capital is 11%.
a. What is the cash outflow at Time 0 )
b. Calculate net operating cash flows in years 1, 2, and 3?
c. Calculate the non-operating terminal year cash flow.
Why is it important for trainers to be able to estimate the ROI, cost-benefit analysis, and break-even analysis? Give three reasons why calculating this information will assist the training endeavours.
What is the market value of a standard interest rate swap when it is created and why does the market value of the swap change over time? Identify two financial intermediaries? What are there functions? What are their major roles in the economy? Discu..
The following table shows the price of $1000 face value 1-year, 2-year, 3-year, 9-year and 10-year US Treasury zero coupon bonds as of Oct. 17, 2016. Use pure expectations hypothesis to determine: the expected interest rate on a 1-year bond one year ..
Visionary TV Corporation bonds are currently priced at $1,088. They have a par value of $1,000 and 12 years to maturity. They pay an annual coupon rate of 6%. What is the yield to maturity on this bond?
find the "terminal" stock price using a benchmark PE ratio. What is the target stock price in five years?
Determine the economic service life and corresponding AW of this challenger.
Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. Calculate the EAC for both conveyor belt systems.
How much money will Analog need to borrow in order to end up with $830,000 spendable cash?
First determine the tax issue. Then research the issue and determine your conclusion. Finally, write up your results using the following format: Deducting Charitable Contributions. Your clients, Sonny and his wife Honey, believe in worshiping Ta-Ra,..
Seether Co. wants to issue new 11-year bonds for some much-needed expansion projects. The company currently has 8.7 percent coupon bonds on the market that sell for $959.22, make semi-annual payments, and mature in 11 years. The company should set a ..
Vigo Vacations has $202 million in total assets, $4.9 million in notes payable, and $23.5 million in long-term debt. What is the debt ratio?
A $90,000 investment is made. Over a 5-year period, a return of $30,000 occurs at the end of the first year. Each successive year yields a return that is 7% less than the previous year’s return. If money is worth 5%, what is the equivalent present wo..
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