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RightPrice Investors, Inc., is considering the purchase of a $450,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $80,000 in five years. The computer will replace 5 office employees whose combined annual salaries are $125,000. The machine will also immediately lower the firm’s required net working capital by $100,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 40 percent. The appropriate discount rate is 10 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the price of a perpetual bond with a par value of $1,000.00 and a coupon rate of 7.25% (semi annual coupon)? The bond has a nominal yield to maturity of 6.90%.
The principal is repaid at the end by newly borrowed money (the debt is rolled over).
What is the decrease in the value of the company due to expected bankruptcy costs?
When would it make sense for a firm to call a bond issue? Company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date..
An individual has $110,000 in a retirement account. Each month she deposits $1,000 while earning 5% a year on her money. How much money will be in the account in 10 years? How much of this amount is due to the $110,000 that she began with and how muc..
What are Dakota’s average and marginal tax rates on taxable income?
What would be the effects of this policy change on the retirement behavior of workers?- Would the Social Security trust fund balance increase or decrease? Why?
What managers are involved in variance analysis and the management control process? Explain the concept of the Yield Curve.
Bank Z offers a$1,000 loan at 9.24% interest paid quarterly. Bank M offers a $1,200 loan at 9.21% interest paid monthly. Which loan has the lowest cost?
The efficient market hypothesis predicts that most fundamental analysis is doomed to failure. Explain why.
What is the initial outlay associated with this? project? Should this machine be? purchased?
The five basic principles of finance include all of the following EXCEPT
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