Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Wendy's boss wants to use straight line depreciation for the new expansion project because he said it will give higher net income in early years and give him a larger bonus. The project will last 4 years and requires $1,700,000 of equipment. The company could use either straight line or the 3-year MACRS accelerated method. Under straight line depreciation, the cost of the equipment would be depreciated evenly over its 4-year-life. (Ignore the half-year convention for the straight line method). The applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%, as discussed in Appendix 11A. The project cost of capital is 10% and its tax rate is 40%.
a. What would the depreciation expense be each year under each method?
b. Which depreciation method would produce the higher NPV, and how much higher would it be?
c. Why might Wendy's boss prefer straight line depreciation?
?Bob's Tractor and Party Supply has two separate? divisions: party? supplies, and tractor supplies and services. The party supply division has a beta of 1.2 and is financed by? 25% debt. A project has recently become available for each division with ..
Suppose you are asked to do a cash flow budget for the next 12 months for a newly opened baby health clinic. The budget must be done on a month-by-month basis. As the clinic has just opened you have no historical accounting data. The clinic is allowe..
If two bonds have the same duration, the change in their price when interest rates change will be the same. For non-callable bonds, duration provides only a linear approximation of a bond's price changes as interest rates change.
Suppose that the Fed decides not to intervene with monetary policy. Show how the economy will adjust back to long-run equilibrium.
What is the holding period return for the year on a bond with a par value of $1,000 37. and a coupon rate of 8.5% if its price at the beginning of the year was $1,215 and its price at the end of the year was $1,020? Assume interest is paid annually.
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. What is the Current share price?
A multinational financial institution in Chicago wishes to transfer 50,000,000 from a bank in Berlin, Germany. The transfer will take place in February although the transaction will be hedged with March euro futures contract - which matures one month..
A company buys a piece of equipment that cost $10000. This piece of equipment will last 10 years and at the end of those 10 years it will have a salvage value of $1500. Each year there are $1000 in operation and maintenance cost and the company’s tot..
Metropolis Health System (MHS) has received a wellness grant from the charitable arm of an area electronics company. The grant will run for 24 months, beginning at the first of the next fiscal year. Two therapists and two registered nurses will each ..
Big Box retailing has a market capitalization of $500 million and 20 million shares outstanding. In order to finance its growth, the management of Big Box plans to raise further capital through a rights issue. For every ten rights, shareholders can p..
Achieving the goal of price stability with low and steady inflation allows the Fed to achieve other goals, such as stable interest rates and stable foreign exchange rates.- why will it be hard to achieve stable interest rates?
Determine a fair price for a two-year cashor-nothing option with exercise price of 120 that pays 120 if it expires in-the-money.
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd