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Caine Bottling Corporation is considering the purchase of a new bottling machine . The machine would cost $199 , 060 and has an estimated useful life of 8 years with zero salvage value.
Management estimates that the new bottling machine will provide net* annual cash flows of $35 , 200. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 10% .
Calculate the net present value.
How much would the reduction in downtime have to be worth in order for the project to be acceptable?
A 10 year bond with the face value of 20,000 is offered for sale at 17,000 in the market. The nominal annual interest rate for the bond is 8%, paid quarterly. Calculate the effective annual rate of return within a 3% point range when you purchase it ..
You’ve worked out a line of credit arrangement that allows you to borrow up to $45 million at any time. The interest rate is .49 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a non-interest-bearing accou..
The XYZ Company just paid a dividend of D0 = $1.50 per share, and that dividend is expected to grow at a constant rate of 5.00% for the first 2 years and then 2% per year from year 3 till forever. The company's beta is 1.1, the expected market return..
If your nominal annual required rate of return is 12.0 percent with semiannual compounding, how much should you be willing to pay for this bond?
The common stock of Sweet Treats has a total return of 11.62 percent, a stock price of $48.20, and recently paid an annual dividend of $2.38. What is the capital gains rate if the company maintains a constant dividend?
If the risk-free rate of return was 4.5% and the market risk premium is 5%, what is the required market rate of return?
Calculate the duration of the assets. 2-2 If the duration of the liabilities is 0.354 years, calculate the leverage-adjusted duration gap.
If the expected purchase price of the property is $1,250,000 and you are planning on making a 20% down payment, calculate the debt yield ratio.
Let US$4=MX$15. If inflation in the US goes up by 4%, and inflation in Mexico goes up by 6%, what do we expect the exchange rate to be in the next period? Assume purchasing power parity holds. Show all work.
Are taxes necessary for the cost of debt financing to be less than the cost of equity financing?
Throughout this course we have been using the accrual basis of accounting to complete our work. However, there are two other methods of accounting, the cash and the modified cash bases. Explain the accrual, cash, and modified cash bases of accounting..
What is the value of an investment that will pay investors 2,270 dollars per year for 7 years
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