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Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,102,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $245,000 per year. Machine B costs $5,310,000 and will last for nine years. Variable costs for this machine are 35 percent and fixed costs are $180,000 per year. The sales for each machine will be $11.1 million per year. The required return is 11 percent and the tax rate is 30 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis.
Calculate the NPV for each machine.
Calculate the EAC for each machine.
What lump sum of money must be deposited into a bank account at the present time so that $500 per month can be withdrawn for six years, with the first withdrawal scheduled for seven years from today? The interest rate is 0.5% per month. (Hint: Monthl..
A condominium is purchased for $80,000 with a down payment of $12,000 at an annual interest rate of 9% for 15 years. Calculate the unpaid balance after 10 years of making payments. What would be the market value of the condominium in Exercise 21 afte..
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $136,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $591,000 p..
A firm has debt of $7,000, equity of $12,000, a leveraged value of $8,900, a cost of debt of 7%, a cost of equity of 14%, and a tax rate of 30%. What is the firm's weighted average cost of capital?
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Compute each of the ratios for 2013 and 2014 and indicate whether each ratio was getting "better" or "worse" from 2013 to 2014 and whether the 2014 ratio was "good" or "bad" compared to the Industry Avg (round all numbers to 2 digits past the deci..
Each financial decision made by a corporate manager can be evaluated by its direct impact on the corporation's stock price.
1.what factors affect a firms degree of transaction exposure in a particular currency? for each factor explain the
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