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Ace Software, Inc. is contemplating replacing some existing equipment with some new hardware. The existing equipment, carried on the books at $800, is being depreciated using the straight-line method to a salvage value of $80 over its remaining life of 8 years. Ace could scrap the equipment today for $900.
The new machinery would also be depreciated using the straight-line method to a salvage value of 20% of its purchase price over an expected life of 8 years. The new equipment would be expected to lower annual operating expenses by $750. The new machinery would require additional net-working-capital of $160. Ace has a required return of 12% and a marginal tax rate of 40%.
Find the maximum amount that the firm would be willing to pay for the new equipment if replacement is to be worthwhile. ?
What is the (1) marginal and (2) average tax rate paid for a firm with taxable income of a). $25,000? b). $85,000? c). $250,000? d). $12 million? e). $200 million?
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Carlson Inc. is evaluating a project in India that would require a $6.2 million investment today (t = 0). The after-tax cash flows would depend on whether India imposes a new property tax. There is a 50-50 chance that the tax will pass, in which case..
In their 2011 10-K report, eBay reported a stock option grant of 9,674 million options during the year, the fair-value of which was computed as $8.97. If the options have, on average, a five-year vesting period. What expense did the company report in..
Two specific, real-world examples of asset-backed securities with appropriate maturities and how they compare to a Treasury security of the same maturity in terms of the spread over the Treasury yield
The dominant form of institutional venture capital firms operate as?
The Global Growth Fund is a load fund with a 6 percent front load fee. It started the year with a Net Asset Value (NAV) of $16.50. During the year the fund distributed $1.05, and at the end of the year its NAV was $17.95. What was the fund's return, ..
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