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Your firm is contemplating the purchase of a new $580,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $60,000 at the end of that time. You will be able to reduce working capital by $75,000 (this is a one-time reduction). The tax rate is 35 percent and the required return on the project is 15 percent. If the pretax cost savings are $200,000 per year, what is the NPV of this project? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV $ 48979.30 Will you accept or reject the project? Reject Accept X If the pretax cost savings are $150,000 per year, what is the NPV of this project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV $ -59965.74 Will you accept or reject the project? Accept Reject X At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost savings $
What is the opportunity cost of not taking the cash discount?
QV borrowed an additional $1,500,000, but paid down existing loans by $250,000. They made interest payments of $45,00, sold $200,000 worth of stock, added $1.75 million to retained earnings, and paid out dividends of $200,000. Given this information,..
KADS, Inc., has spent $370,000 on research to develop a new computer game. The firm is planning to spend $170,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $47..
Charming Shoppes will pay an annual dividend of $2.55 next year with future dividends increasing by 4% annually. If the market rate of return on this stock is 12.5%, what should the stock be currently selling for?
Suppose you are a financial detective. Which ratio would you first want to compare with that of other ski shops? Days Sales Outstanding, inventory turnover.
You are planning to borrow $100,000 for a major purchase, to be repaid in equal monthly instalments over the next ten years. If interest rates are 13% per annum (compounded monthly), how much should each instalment be, if paid at the end of the month..
Prepare a memo to you staff explaining the steps that will be needed to construct a pro-forma financial statement for your company. Be sure to address the following: The forecast 201 x income statements, The forecast the 201x balance Sheet, Raising t..
A $1,000 par value bond with a market price of $970 and a coupon interest rate of 10 percent. Flotation costs for a new issue would be approximately 5 percent. The bonds mature in 10 years and the corporate tax rate is 34 percent.
Frasier Cabinets wants to maintain a growth rate of 5 percent without incurring any additional equity financing. The firm maintains a constant debt-equity ratio of .55, a total asset turnover ratio of 1.30, and a profit margin of 9 percent. What must..
A firm has had the indicated earnings per share over the last three years. If the firm's dividend policy was based on a constant payout ratio of 50 percent, determine the annual dividend for each year.
The weight of each security in your portfolio?
I would like you to utilize the concepts to determine the Net Present Value of your degree of university. Additionally, you may want to further motivate yourself by calculating the degree of effort you are putting into this degree (ie hours expended ..
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