Potential vendors to purchase network equipment

Assignment Help Financial Management

Reference no: EM13937293

Assume you are meeting with Cisco and Avaya as potential vendors to purchase network equipment.

The initial Cisco network equipment will cost you $10,000 now, $3,000 of maintenance every year for the next 3 years and $1,000 for lease upgrade in year the year later.

The initial Avaya network equipment will cost you $11,000 now, $3,000 of maintenance every year for the next 2 years and $2,500 for lease upgrades for the next two years.

The rate of return is 5% per year. As a manager, how much should you “presently” budget for now for purchasing Cisco vs. Avaya equipment? Which would you choose? (Hint: Time value of money: FV=PV(1+i)n

Reference no: EM13937293

Questions Cloud

Compute the weighted average cost of capital of the firm : IBM expects to pay a dividend of $4 next year and expects these dividends to grow at 7% a year. The price of IBM is $90 per share. Your estimate of the market risk premium is 6%. The risk-free rate of return is 5% and IBM has a beta of 1.2.What is IB..

What is the firms cost of equity : National Home Rentals has a beta of 1.24, a stock price of $22, and recently paid an annual dividend of $.94 a share. The dividend growth rate is 4.5 percent. The market has a 10.6 percent rate of return and a risk premium of 7.5 percent. What is the..

Percentage change in price of bonds : Both Bond Bill and Bond Ted have 12.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to maturity, whereas Bond Ted has 21 years to maturity. Requirement 1: If interest rates suddenly rise by 2 percent, w..

Considering making loan : Mitchell Bancorp is considering making a loan at 3% interest (c/a) to SohnCo to buy a machine tool worth $300 million. The tool has no salvage value and is depreciated over 3 years by sum-of-years digits. In this state, SohnCo pays 50% tax. The befor..

Potential vendors to purchase network equipment : Assume you are meeting with Cisco and Avaya as potential vendors to purchase network equipment. The initial Cisco network equipment will cost you $10,000 now, $3,000 of maintenance every year for the next 3 years and $1,000 for lease upgrade in year ..

Considering selling product : Valles Global Industries (VGI) is considering selling a product. The contract sells parts for revenue of $65 million a year for 5 years. Their initial investment is $250 million and the equipment has no salvage at 5 years. They estimate production co..

How much should you borrow at the risk-free rate : In order to replicate the payoff of your two call options at the expiration date that you selected, how many shares of stock should you buy today, and how much should you borrow at the risk-free rate? Calculate and explain.

Calculate the beta and standard deviation of Stock I : Consider the following information on Stocks I and II: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock I Stock II Recession .21 .050 −.26 Normal .66 .350 .18 Irrational exuberance .13 .210 .46. Calculate the beta..

Zero coupon bond with face value : A zero coupon bond with a face value of $1,000 is issued with an initial price of $492.96. The bond matures in 15 years. What is the implicit interest, in dollars, for the first year of the bond's life? Use semiannual compounding.

User Account

All Pages