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A bicycle manufacturer currently produces 270,000 units a year and expects output levels to remain steady in the future. It buys chains from an outside supplier at a price of $ 2.20 a chain. The plant manager believes that it would be cheaper to make these chains rather than buy them. Direct? in-house production costs are estimated to be only $1.40 per chain. The necessary machinery would cost $285,000 and would be obsolete after ten years. This investment could be depreciated to zero for tax purposes using a? ten-year straight-line depreciation schedule. The plant manager estimates that the operation would require $22,000 of inventory and other working capital upfront? (year 0), but argues that this sum can be ignored since it is recoverable at the end of the ten years. Expected proceeds from scrapping the machinery after ten years are $21,375. If the company pays tax at a rate of 35% and the opportunity cost of capital is 15 % ?, what is the net present value of the decision to produce the chains? in-house instead of purchasing them from the? supplier?
You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 33-year mortgage loan for 75 percent of the $3,330,000 purchase price. The monthly payment on this loan will be $16,600. What is the APR on this loan? What is the..
ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. Calculate his total cash flow and rate of return.
Calculate the loss to shareholders from the exercise of employee stock options during 2015 - Prepare a comprehensive income statement that distinguishes after-tax operating income from financing income and expense.
George Yanase was a paying guest at the Royal Lodge-Downtown Motel in San Diego, California. Yanase was a member of the Automobile Club of Southern California. Yanase’s widow sued the Auto Club for negligence. Is the Auto Club liable?
All City Inc. is financed 35% with debt, 10% with preferred stock, and 55% with common stock. What is its after-tax WACC?
If the portfolio has a beta of 1.0, what should the strike prices of the put options be?
What will be the difference in monthly payments of either mortgages?
The Johnsons have accumulated a nest egg of $15,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, what is the price range of houses t..
Consider a project with inflows of $20,000-outflows of $13,000. If tax rate is 30% and if cash flow in Year 1 is $6,500. what is the depreciation amount?
NPV Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A -$11 $4 $7 $1 Project B -$20 $12 $5 $9 What are the projects' NPVs assuming the WACC is 5%? What are the projects' IRRs assuming the WACC is ..
Explain the various strategies for the procurement and production processes and why it is important to make each of the processes less dependent on each other.
What is a New Markets Venture Capital Company (NMVCC)?
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