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Big Rock Brewery currently rents a bottling machine for $54,000 per? year, including all maintenance expenses. The company is considering purchasing a machine instead and is comparing two? options: a. Purchase the machine it is currently renting for $155,000. This machine will require $23,000 per year in ongoing maintenance expenses. b. Purchase a? new, more advanced machine for $255,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year.? Also, $35,000 will be spent upfront in training the new operators of the machine. Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each? year, as is the rental of the machine. Assume also that the machines are subject to a CCA rate of 25% and there will be a negligible salvage value in ten? year's time? (the end of each? machine's life). The marginal corporate tax rate is 30%. Should Big Rock Brewery continue to? rent, purchase its current? machine, or purchase the advanced? machine? To make this? decision, calculate the NPV of the FCF associated with each alternative.? (Note: the NPV will be? negative, and represents the PV of the costs of the machine in each? case.)
The Yubaba Company has so far not paid a dividend on its stock. Investors believe that the Company won’t pay a dividend next year, but that it will pay dividends starting two years from now. The dividend then is expected to be $0.20 per share. What i..
Merton Enterprises has bonds on the market making annual payments, with 14 years to maturity, and selling for $1,086. At this price, the bonds yield to maturity is 6.8 percent. What must be the coupon rate on Merton’s bonds? (Face Value =$1000)
You deposit $500 today in a savings account that pays 3.5% interest, compounded annually. How much will your account be worth at the end of 25 years?
Find the some ratio analysis for Disney for 2014. Would you be able to help me complete some of the other answers and check if the ones I've done are correct?
What is the significance of each of the different types of value in the valuation process? Use examples to support your response?
Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated.
A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast growing craft beer industry. Your projected sales in the first year are 8300 kegs. Your projected growth rate is 5 percent. What is t..
What is the debt-deflation process? Does this process provide any insight into why the Federal Reserve rescued Bear Stearns?
Suppose a stock had an initial price of $82 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $90. What was the dividend yield and the capital gains yield? (Do not round intermediate calculations. Enter y..
Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $8.75 per share and has announced that it will increase the dividend by $6.75 per share for each of the next four years, and then never pay another dividend.
Bond rating agencies have invested significant sums of money in an effort to determine which quantitative and non-quantitative factors best predict bond defaults. To recoup those costs, some bond rating agencies have tied their ratings to the purchas..
Compute the present value of interest tax shields generated by these three debt issues. Consider corporate taxes only. The marginal tax rate is Tc = 0.35.a. A $1,800, one-year loan at 10% b. A four-year loan of $1,800 at 10%. Assume no principal is r..
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