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Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $470,000 is estimated to result in $190,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $80,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $2,500 in inventory for each succeeding year of the project. The shop’s tax rate is 35 percent and its discount rate is 9 percent.
Calculate the NPV for this project. (Round answer to two decimal places)
Sunburn Sunscreen has a zero coupon bond issue outstanding with $20,000 face value that matures in one year. The current market value of the firm’s assets is $20,900. The standard deviation of the return on the firm’s assets is 26% per year, and the ..
Salevsky Manufacturing Company is considering the purchase of a new machine for $250,000 that will reduce manufacturing costs by $90,000 annually. Salevsky will use the 3-year MACRS accelerated method to depreciate the machine, and it expects to sell..
What are the total contribution margin and and total product margin for a Healthchek visit?
Cypress Corporation has regular taxable income of $170,000 (assume annual gross receipts are greater than $5 million) and a regular tax liability of $49,550 for 2014. The corporation also has tax preference items amounting to $105,000. Calculate Cypr..
Suppose you bought a 6 percent coupon bond one year ago for $950. The bond sells for $995 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? What was your total nominal rate of return on this..
The parent of each firm subsidizes its respective research and development centre on an annual basis. Which firm is subject to a higher degree of economic exposure? Explain.
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years,
Some have argued that, if the firm issues an even higher dividend than expected, it must mean they do not have many profitable, new projects to invest in. Thus the stock price should fall. How would you respond and why?
Ken Investor expected the Widget Corporation to pay dividends of $4, $4.5, and $5 over the next three years. He also expects that the stock will have a price at the end of a three- year holding period of $250 per share. If Ken requires a 20% return o..
A short-term financial decision based on an MNC management's expectation that the local foreign currency will appreciate may be A. increasing local customers' accounts receivable and increasing local notes payable. B. increasing local accounts receiv..
A buyer has just purchased a home for $250,000. The buyer made a 20% down-payment and secured a note for the remainder at an interest rate of 7 percent for 25 years. Calculate the principal balance at the end of the first month by calculating the int..
our company has decided to set up a welfare fund with an initial payment of Ghc 275m which is compounded six-monthly over a four-year period at 20% per annum. Calculate the Size of the fund at the end of the four years. An entrepreneur purchased a pi..
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