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Montilus Products Inc. is considering the purchase of a new machine, which will reduce manufacturing costs by $15,000 annually. Montilus will use the MACRS accelerated method to depreciate the machine (5-year MACRS class life), and it expects to sell the machine at the end of its 6-year operating life for $10,000. The firm expects to be able to reduce net operating working capital by $12,000 when the machine is installed, but required working capital will return to the original level when the machine is sold after 6 years. Montilus's marginal tax rate is 40 percent and it uses a discount rate of 12 percent to evaluate projects of this nature. If the machine costs $50,000 what is the project's NPV and IRR?
Companies often use leverage to help augment profits. From your accounting knowledge discuss if you think too much leverage is good or bad. What are the benefits and challenges related to implementing an activity based costing system?
Shalit Corporation's 2011 sales were $5 million. Its 2006 sales were $2.5 million. At what rate have sales been growing? Suppose someone made this statement: "Sales doubled in 5 years.
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.
A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. Its estimated salvage value at the time is expected to be $5,000..
A tax rate of 34%, the market return is 13.2% and the risk-free rate is 4.5%. 7,500 preferred stock shares selling at $88/share with a 6% dividend rate. 265,000 common shares outstanding selling for $76/share. The dividend is expected to grow by 4% p..
question 1consider an asset which pays continuous dividend.nbsp letnbsp s 100 and r10.nbspsuppose the 6-month futures
What is the present value (as of month 0) of a perpetuity that pays $200 every quarter forever? The discount rate quoted on an APR basis is 10%, and the first payment will be made at the end of the year (i.e., quarter 4).
In terms of resource investment requirements, what is the cost of Casa de Diseno's operational inefficiency - what annual savings will result, assuming the sales remain constant?
Marcel Co. is growing quickly. The company just paid a dividend of $2.00. Dividends are expected to grow at a 25% rate for the next three years, with the growth rate falling off to a constant 5% thereafter. If the required return is 7%, what is the c..
Consider a trading position in options which involves: i. A long position in a call with a strike price of X=70 and a call premium c=10 ii. A short position in a put with a strike price of X=70 and a call premium p=10 Both options have the same under..
Suppose you observe two call options on GE stock, both with exercise price of $50. Call 1 has a maturity date of November with a price of $2.30 while call 2 has a maturity date of December (exactly one month later) with a price of $2.10. What would y..
Lucky Dog Inc currently has $95,000 cash on hand and no other assets. It has 1000 shares outstanding. What should be its current share price? What is the NPV of this investment project? What should happen to the price of the company’s stock upon anno..
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