Find the break even annual income

Reference no: EM1344532

1. Company is purchasing new equipment for $120,000. You estimate the life of this equipment is 6 years and you will depreciate it in a straight line over 5 years to be conservative and assume no terminal value. The administration, maintenance and insurance cost for the equipment to be estimated to be $8,000 per year. If your cost of borrowing is 8% and your tax rate is 32%, what is the break even annual income made in advance at the beginning of the year?

2. You have two offers for an office photocopier. Copier A cost $700, will cost $100 a year to run and will last four years. Copier B costs $600, costs $120 a year to run and will last for three years. Your cost of capital is 12%. Which is better deal?

3. KLM Ltd has the following structure:$100,000,000 three year bonds with a coupon of 7% trading at 95% and 2.5 million shares trading at $4.55. The market risk premium is 8% and the risk free rate of return is 4%. KLM has a beta of 1.3 and pays tax at 35%. Calculate the WACC of KLM?

4. There is a US treasury bond with coupon 4.5% and maturing in mid March 2015. Interest rates are flat at 3%. What's the price of the bond (ignoring transaction costs and other distortions)?

Reference no: EM1344532

Questions Cloud

Assume that you balance a 5kg ball on the tip : A brass plate measures 30 cm by 40 cm. The coefficient of linear thermal expansion is 19.0 10-6/°C. If the temperature of the plate is increased by 10.0 K, next what is the increase in the area of the plate? a) 0.350 cm2 b) 0.404 cm2 c) 0.456 cm2 ..

Explain what is etcs value : Explain what is the value of ETC according to MM with corporate taxes and What is ETC's value

Defining method dashedline with one parameter : Write a definition of method dashedLine, with one parameter, an int .

At what speed will the cart travel : Two automobiles of equal mass approach an intersection. One vehicle is travelling with velocity 13 m/s toward the east and the other is travelling north with speed v2i. Neither driver sees the other.

Find the break even annual income : Company is buying new equipment for $120,000. You estimate life of this machine is 6 years and you will depreciate it in a straight line over 5 years to be conservative and suppose no terminal value.

Elucidate the marginal cost of a string : Elucidate the marginal cost of a string. Compute marginal revenue and marginal cost for each quantity.

How to produce two high energy photons : A positron is a particle of "antimatter"; it has the same mass as an electron (9e-31 kg), but its charge is positive instead of negative. At research facilities such as Cornell Electron Positron Storage Ring at Cornell University in New York, high..

Explain what is the operating cash flow : Explain what is the Operating Cash Flow and Show your calculations

Explain the economic exposure to the eur : Explain the economic exposure to the EUR from the perspective of the Tunisian JV partner and provide one recommendation how the French company could hedge its exposure to the TND.

User Account

All Pages