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ACME Manufacturing is considering replacing an existing production line with a new line that has a greater output capacity and operates with less labor than the existing line. The new line would cost $1 million, have a five-year life, and be depreciated using MACRS over three years. At the end of five years, the new line could be sold as scrap for $1,530,000 (in year 5 dollars). Because the new line is more automated, it would require fewer operators, resulting in a savings of $53,000 per year before tax and unadjusted for inflation (in today's dollars). Additional sales with the new machine are expected to result in additional net cash inflows, before tax, of $119,000 per year (in today’s dollars). If ACME invests in the new line, a one-time investment of $10,000 in additional working capital will be required. The tax rate is 35 percent, the opportunity cost of capital is 10 percent, and the annual rate of inflation is 3.30 percent. What is the NPV of the new production line? (Round intermediate calculations and final answer to the nearest whole dollar, e.g. 5,275. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Prepare a statement of revenues and expenses and a statement of changes in net assets for Wise Owls for 20X1.
The risk-free rate of return is currently 0.05, whereas the market risk premium is 0.07. If the beta of RKP, Inc., stock is 1.7, then what is the expected return on RKP?
Write overview about Cost-volume-profit (CVP)
What are the portfolio weights for a portfolio that has 152 shares of Stock A that sell for $30 per share and 120 shares of Stock B that sell for $20 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g.,..
A US firm has Euro receivables of E100,100,000 from Germany in six months. It decides to use options to hedge the receivables. Put options with exercise price $1.60 and premium $0.04 are available. Suppose the firm fully hedges it’s receivables (that..
Gardial GreenLights, a manufacturer of energy efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a $15 million investment in new machinery.
how much would you be willing to pay for the investment?
find the yields and the duration's of the two bonds.
Determine the equivalent taxable yield.
Describe recent situations when you had to use persuasion to motive others on a team. If you were successful, explain strategies or techniques from this chapter that you used to persuade your audience. If you were not successful, identify a strategy ..
What is the present value of a perpetuity that pays $1,200 every six months forever?
A portfolio manager plans to use a Treasury bond futures contract to hedge a bond portfolio over the next three months. The portfolio is worth $100 million and will have a duration of 4.0 years in three months. Suppose that all rates increase over th..
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