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Pilot Plus Pens is deciding when to replace its old machine. The machine's current salvage value is $2.40 million. Its current book value is $1.60 million. If not sold, the old machine will require maintenance costs of $865,000 at the end of the year for the next five years. Depreciation on the old machine is $320,000 per year. At the end of five years, it will have a salvage value of $140,000 and a book value of $0. A replacement machine costs $4.50 million now and requires maintenance costs of $350,000 at the end of each year during its economic life of five years. At the end of the five years, the new machine will have a salvage value of $820,000. It will be fully depreciated by the straight-line method. In five years a replacement machine will cost $3,400,000. The company will need to purchase this machine regardless of what choice it makes today. The corporate tax rate is 34 percent and the appropriate discount rate is 8 percent. The company is assumed to earn sufficient revenues to generate tax shields from depreciation. Calculate the NPV for the new and old machines. (Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
If the cost of writing a payroll check is $1.50, what additional amount could be saved on an annual basis from switching to a monthly payroll period?
Ethier Enterprise has an unlevered beta of 1.05. Ethier is financed with 45% debt and has a levered beta of 1.45. If the risk free rate is 4.5% and the market risk premium is 7%, how much is the additional premium that Ethier's shareholders require t..
What are the various methods for recruiting employees. What is a discount bond? Is there a build in capital gain or loss for discount bonds?
Complete the information for the most recent year. - Ratios and rate of change data in the income statement should be represented as a percentage.
What is Rollins' cost of issuing common stock? What is the cost of issuing preferred stock?
Jiminy’s Cricket Farm issued a 30-year, 7% semiannual bond 3 years ago. The bond currently sells for 93% of its face value. The company’s tax rate is 35%. what is the pretax cost of debt? A) What is the aftertax cost of debt? B) Which is more relevan..
Faith has nine brothers and sisters and each inherited a one-tenth interest. What is Faith's adjusted basis for her one-tenth undivided interest?
Find the value of an European foreign currency call Is the spot price is 5.25 the exercise price is 5.40 the domestic rate is 6.1%
Managerial accounting is designed to satisfy needs of external users-including creditors-investors
You just signed up for a new credit card. What is the monthly interest rate? What is the annual effective interest rate?
HR Industries (HRI) has a beta of 1.2, while LR Industries' (LRI) beta is 0.7. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. The expected rate of inflation built into rRF falls by 1.5 percentage points, the rea..
Saunders Corporation currently has 1,000,000 common stocks outstanding. It considers raising $10 million through issuing 20-year 6.7% coupon bonds – annually paid - with 18 warrants. If you decide to exercise your warrants at Year 10. What is the tot..
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