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The washington post is considering replacing an existing press with a more efficient press. The new press cost $55000 and requires $5000 in installation costs. The old press was purchased 9 years ago for an installed cost of $45000 and can be sold for $20000 net of any removal costs today. Both presses are depreciated under the MACRS 5 year recovery schedule. The firm has a 35% marginal tax rate. The new press requires $5000 less in inventory kept on handing during the project and will reduce expenses by $19000 in each year(not cumulative) of operation,with no change to expected revenues. Both presses could operate for 3 more years before needing to be replaced, in 3 years neither press will have any salvage value and the newspaper expects tp stop all print publication due to increased internet usage at that time. If the firms WACC is 11% should they replace the press.
Your uncle borrows $57,000 from the bank at 11 percent interest over the nine-year life of the loan. How much of his first payment will be applied to interest?
A project has the following estimated data: price = $54 per unit; variable costs = $36 per unit; fixed costs = $19, 300; required return = 12 percent; initial investment = $26, 800; life = four years. Ignoring the effect of taxes, what is the account..
You purchased one of Big Corp.’s 8%, 10-year convertible bonds at its $1,000 par value a year ago when the company’s common stock was selling for $20. Similar bonds without a conversion feature returned 12% at the time. The bond is convertible into s..
Using the above cash flows, calculate the following for each project. Assume a 11% required return a. NPV b. Payback Period c. Discounted Payback Period d. IRR e. MIRR. Assuming independent projects, provide an accept/reject decision for each capital..
what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank? cars?
Show & Sell is interested in finding the optimum allocation of the budget to radio and TV advertising. Provide a linear programming model formulation only; you do not need to identify an optimal solution.
Consider a U. S. firm with receivables of BRL 500,000 in 25 days. It hedges this position using a CME BRL futures contract maturing in 45 days. A financial analyst notes that the BRL futures contract tends to change by USD 0.0066 in response to a USD..
Discuss why or why not a callable bond trading at a premium price would be an appropriate investment for the target audience's organizations.
Discuss the relationship between bond value and interest rate changes. What effect do interest rate changes have on bond values on the secondary markets? As the maturity date on a bond approaches what happens to the effect, on bond value, of interest..
Compute the annualized rate of return earned by Fluffy Finance on the loan?
Net working capital is 1,500,000; additional net working capital investments each year (starting in year 1) equal to 15% of the projected sales increase for the following year. Decreases in sales will result in recovery of net working capital equal t..
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). (A) Suppose that today you buy a bond..
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