Considering purchasing vertical drill machine

Assignment Help Financial Management

Reference no: EM132032016

"A corporation is considering purchasing a vertical drill machine. The machine will cost $66,000 and will have a 2-year service life. The selling price of the machine at the end of 2 years is expected to be $43,000 in today's dollars. The machine will generate annual revenues of $62,000 (today's dollars), but the company expects to have annual expenses (excluding depreciation) of $12000 (today's dollars). The asset is classified as a 7-year MACRS property. The tax rate for the firm is 44%. The general inflation rate is 4% and will impact the annual revenue, annual expenses, and salvage value. What is the real (inflation-free) rate of return for this machine? Express your answer as a percentage between 0 and 100."

Reference no: EM132032016

Questions Cloud

What is the macaulays duration : Suppose a two-year bond with annual 10% coupon rate is trading at par. The bonds face value is $1,000. What is the Macaulays duration?

Importance of the liver - pancreas and kidneys : The goal of this assignment is to show that you understand the importance of the liver, pancreas, and kidneys in the proper functioning of the human body

Ten-year annuity with end-of-year payments : Gerry pays $W to buy a ten-year annuity with end-of-year payments of $1,400.

Calculate the IRR of the cash flow based on actual dollars : Calculate the IRR of the cash flow based on actual dollars.

Considering purchasing vertical drill machine : A corporation is considering purchasing a vertical drill machine. The machine will cost $66,000 and will have a 2-year service life.

Calculate the amount of eliza fifth payment : Calculate the amount of Eliza’s fifth payment, the amount of her tenth payment, and the amount of her fifteenth payment.

What total costs will ronald pay : Ronald Roth started his new job as controller with Aerosystems today. What total costs will Ronald pay if he enrolls in the HMO plan? Annual medical cost:

Shows interest payments on borrowed and invested funds : Prepare a cash budget that shows interest payments on borrowed/invested funds.

What a behavioral health healthcare venue is : Provide an overview of what a behavioral health healthcare venue is and how these services compare to more traditional healthcare venues.

User Account

All Pages