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XYZ is interested in buying a new machine which is expected to cost $85,000. In addition, the company will pay $15,000 in shipping and $5,000 in installation costs. The MACRS category is five years and the company expects to sell the machine at 25% above book value at the end of year 5. Its investment in working capital will be recovered once the machine is sold. Before buying this machine, it paid a consultant $5,000 fee for her advice. Once the machine is installed, the company will experience an increase in current assets of $7,000 and a decrease of $2,000 in current liabilities. The new machine will increase revenue by $15,000 while decreasing operating costs by $20,000 per year. Its tax rate is 35%. Prepare the following statements:
Do not use excel formulas, use PVIF
a) Initial investment
b) Operating cash flows and
c) End of project non-operating cash flows
Using this historical data I need to construct a forecasted profit and loss statement for the clinic's averday day for all of 2009 assuming the status quo. (no changes in utilizization, is the clinic projected to make a profit?)
Contrast the features of a mutual fund investment with those of retail deposits at commercial banks or other depository institutions. In particular, what are their differences in risk and return? Why do you think the Great Depression led the retail p..
An automobile parts manufacturer is evaluating an investment in a new machining tool that could revolutionize its operations, cutting operating costs significantly. Operating costs would fall by $25,000 per year for 5 years. The company is a small fa..
Why is it important for the economies of Europe to converge in order for the European Central Bank (ECB) to effectively implement monetary policy for Europe?
What effective annual rate results from daily compounding of 8%? Suppose that you have a mortgage on your house. You make monthly payments. Your bank quotes APR equal 8.5% per year. What is your effective annual rate?
Salem Company has the following capital structure: 4.0 million shares of stock, selling at $29 each, with β = 1.3; zero-coupon bonds with face amount $65 million, maturing in 8 years, with yield to maturity 7.0%; and 700,000 shares of preferred stock..
Assume you are married and have two children. You want to buy sufficient life insurance to take care of your family if you die. Your wife is a home-maker but has college loan of $40,000. Calculate the amount of insurance you need to purchase. Apply t..
A corporation with a taxable income of $50 million is considering a new venture that would generate an additional $500,000 per year in taxable income. How much additional federal income tax will they pay on this additional income?
The payoff is uncertain as well: The present value of profits could be as high as $500 million or as low as $30 million. The risk-free is rate 10%, and the standard deviation of rate of return on biotech products is 35%. The patent's life is estim..
Two companies manufacture can openers. Relevant data follows: Old School Hi Tech Manufacturing, Inc. Manufacturing, Inc. Degree of Operating Leverage 2.2 5.7 Degree of Financial Leverage 1.5 3.3 Which of these companies is more at risk? Why? Discuss ..
Loan 105,000. 48 months apr 5% down payment zero, monthly payment 2,418.08 how much reinvestment interest does the financial service earn as the lender from investing the loan payments received. They can reinvest immediately at 5% over the entire loa..
General Matter’s outstanding bond issue has a coupon rate of 10.8%, and it sells at a yield to maturity of 8.75%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at fac..
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