Decided to purchase new logging equipment

Assignment Help Financial Management
Reference no: EM131187883

A wood products company has decided to purchase new logging equipment for $100,000 with a trade-in of its old equipment. The old equipment has a BV of $10,000 at the time of the trade-in. The new equipment will be kept for 10 years before being sold. Its estimated SV at the time is expected to be $5,000. Using the MACRS (GDS recovery period), if the equipment is sold in year ?ve, the BV at the end of year ?ve is equal to:

Reference no: EM131187883

Questions Cloud

The purchase of a large stamping machine : Your company is contemplating the purchase of a large stamping machine. The machine will cost $180,000. With additional transportation and installation costs of $5,000 and $10,000, respectively, the cost basis for depreciation purposes is $195,000. T..
What is the book value at the end of six year : Carson Brewing has purchased a hop harvesting machine for $125,00. Delivery charges were $10,000 and installation costs were $15,000. Carson brewing expects to use the machine for 10 years (10 year useful life) and then sell it for a market (salvage)..
Impact on current-net working capital to total assets ratio : A company has current assets of $600,000, fixed assets of $500,000, current liabilities of $350,000, inventory of $300,000, and long-term debt of $500,000. If inventory decreases by $100,000 and current liabilities remain the same, what will be the i..
What is the present value of this cash flow pattern : You have been offered the opportunity to invest in a project that will pay $2793 per year at the end of years one through three and $11016 per year at the end of years four and five. If the appropriate discount rate is 8.34 percent per year, what is ..
Decided to purchase new logging equipment : A wood products company has decided to purchase new logging equipment for $100,000 with a trade-in of its old equipment. The old equipment has a BV of $10,000 at the time of the trade-in. The new equipment will be kept for 10 years before being sold...
Pension plan bond portfolio against rising interest rates : To protect the value of the Star Hospital Pension Plan’s bond portfolio against the rising interest rates that she expects, Sandra Kapple enters into a one-year pay fixed, receive floating U.S. LIBOR interest rate swap, as described in the following ..
The most widely used tool of the federal reserve : The most widely used tool of the Federal Reserve
Established manufacturer in mature growth stage : Hyperion Shrike Inc. is an established manufacturer in a mature growth stage. The company just paid a quarterly dividend of $0.80 on it's shares, which it plans on continuing indefinitely, with an expected annual growth rate, compounded quarterly of ..
Your choices would be most effective in decision making : Due to limited resources, managers need to decide and select different capital projects and investments. To do so, they utilize different capital budgeting techniques including NPV, IRR, MIRR, PI and PB. Select two techniques from the list and compar..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current price of the companys stock

The Jay Strabler Company's last dividend was $10.00 per share and it expects no change in future dividends. What is the current price of the company's stock if the required rate of return is 5 percent?

  Problems associated with using roi as performance measure

ROI has been so popular in many companies around the world almost for a century. Why do you think that was the case? What are the problems associated with using ROI as a performance measure? Do you recommend any other financial measures to be used? W..

  How do credit managers manage the risks

How do credit managers manage the risks related to extending trade credit? Aside from late or non-payment, what other risks do you see with trade credit?

  Weighted average of standard deviations of individual assets

An investor who is in the 33% tax bracket is indifferent between a 9% tax-free muni and a 6% taxable bond. The standard deviation of a portfolio of assets is simply the weighted average of the standard deviations of the individual assets.

  Problem of the coinsurance effects of merging

Suppose firm A and firm B are planning on merging. There are no costs or synergy benefits from the merger. Before the merger firm A has an issue of bonds outstanding. These bonds entitle the holder to a payment of $80 million when the bonds mature ne..

  What is the relevant refunding investment outlay

New Jersey Waster Co. (NJWC) is considering whether to refund a $50 million, 14 percent coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $3 million of flotation costs on the 14 percent bonds over the 30-year life of that issue. ..

  Present value and multiple cash flows

Present Value and Multiple Cash Flows [LO1] Wainright Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? ..

  Define transfer pricing

Define transfer pricing. Give an example of a transfer price for multinational corporations. a) What is the correct way to for a subsidiary to charge a transfer price if they are moving semi-processed goods to a country with a higher tax rate?

  Using hatfield''s data and its industry averages

Using hatfield's data and its industry averages, how well run would you say Hatfield appears to be compared to other firms in its industry? What are its primary strengths and weaknesses? Be specific in your answer, and point to various ratios that su..

  What is the standard deviation of this land investment

You are trying to decide whether to invest some idle cash in undeveloped land. You intend to hold the investment for five years before selling out and sailing the Caribbean. You have made the following estimates of the value of the land five years fr..

  Describe at least three different ways of whether

Describe at least 3 different ways of whether or not the following project should be accepted or rejected (NPV, IRR & Payback for example).

  Spread between treasury securities and the yield on debt

In December 1995 Boise Cascade’s stock had a beta of 0.95. The Treasury bill rate at the time was 5.8% and the Treasury bond rate was 6.4%.  Assume the term structure of interest gives a 200 bp (basis point – a basis point is 1/100 of a %) spread bet..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd