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Kiddy Toy Corporation needs to acquire the use of a machine to be used in its manufacturing process. The machine needed is manufactured by Lollie Corp. The machine can be used for 12 years and then sold for $11,000 at the end of its useful life. Lollie has presented Kiddy with the following options
1. Buy machine. The machine could be purchased for $161,000 in cash. All maintenance and insurance costs, which approximate $6,000 per year, would be paid by Kiddy.
2. Lease machine. The machine could be leased for a 12-year period for an annual lease payment of $26,000 with the first payment due immediately. All maintenance and insurance costs will be paid for by the Lollie Corp. and the machine will revert back to Lollie at the end of the 12-year period.
Assuming that a 11% interest rate properly reflects the time value of money in this situation and that all maintenance and insurance costs are paid at the end of each year, find the present value for the options. Ignore income tax considerations.
How does your analysis change? Which project do you pick and calculate the payback period of each project. Compute the IRR of each project. Which project do you pick, and why?
Formulate a linear program to determine the expected mix of medical treatments to ensure the maximum profit is obtained. Provide all workings and solve using a computer packageto generate the ideal solution.
Three (3) stocks have share values of $12, $75, and $30 with total market rates of $400 million, $350 million & $150 million respectively.
Show the pros and cons of applying different investment decision rules when faced with the choice of investing corporate funds. Provide two examples
The yearly sales for Salco corporation were 4.5 million dollar last year. The firms end-of-year balance sheet was given, so please calculate Salcos total asset turnover, operating return on assets and operating profit margin.
Calculate the option's exercise value and calculate the value of the premium over and above the exercise value? What does this value represent?
You expect inflation to be 3% per year for the next 20 years, and nominal interest rates are expected to stay around 8% per year
Write a review of dividends and investment strategies - explain the key points that the author is trying to communicate. Your review should be at least 1 page and no more than 2 pages, not counting the title or reference pages.
The debt or equity ratio from I-Metrix is based on book values. If you were to evaluate the ratio on the basis of market values, could this ratio tend to be higher or lower than on the basis of book values?
What is the expected shortfall when the confidence level is 95% and what is the VaR for a portfolio consisting of the two investments when the confidence level is 95%?
The income statement of Benning Corporation for month of July shows net income of 1,400 dollar based on Service Revenue 5,500 dollar, Wages Expense dollar 2,300, Supplies Expense dollar 1,200, and Utilities Expense dollar 600.
Multiple Choice questions on stocks and bonds - Which of the following is an internal source of funds?
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