Produce specialized aluminum products for its customers

Assignment Help Financial Management
Reference no: EM131582280

Automated Manufacturers uses high-tech equipment to produce specialized aluminum products for its customers. Each one of these machines costs $1,480,000 to purchase plus an additional $49,000 a year to operate. The machines have a 6-year life after which they can be sold of 10% of the original cost. The equipment is in the 7 year MACRS group. What is the equivalent annual cost of one these machines if the required return is 16 percent and the company’s marginal tax rate is 30%?

Reference no: EM131582280

Questions Cloud

Correlation between us and australia long term interest rate : What is the correlation between the US and Australia long term Interest rates?
How long will you be able to stay in school based on funds : If graduate school costs $23,020 per year, approximately how long will you be able to stay in school based on these funds?
The organization pension fund management division : Mutual of Seattle Group Health Cooperative and co-directors of the organization's pension fund management division.
Capital for corporation that finances an expansion project : What is the weighted average cost of capital for a corporation that finances an expansion project using 40% retained earnings and the rest as debt capital?
Produce specialized aluminum products for its customers : Automated Manufacturers uses high-tech equipment to produce specialized aluminum products for its customers.
Calculate the actual amount of consumption : Calculate the actual amount of consumption, in nominal dollars, using the stated assumptions.
Speed of information dissemination in security markets : Technological changes have decreased the cost and increased the speed of information dissemination in security markets.
About retirement and estate planning : When should you start to think about retirement and estate planning? When should you start taking action?
Growth rate in the dividends payments through time : Given Kodak’s plowback policy, what was the growth rate in the dividends payments through time?

Reviews

Write a Review

Financial Management Questions & Answers

  Bonds of equivalent remaining maturity

Zheng Enterprises, a multinational drug company specializing in Chinese medicines, issued $100 million of 15 percent coupon rate bonds in January 2009. The bonds had an initial maturity of 30 years. The bonds were sold at par and were call- able in f..

  Determine price of put option with same exercise price

Given the following parameters use put-call parity to determine the price of a put option with the same exercise price.

  Calculate dividend per share and total external financing

Brend Inc has projected its investment opportunities over a 3 year planning horizon. The cost of each year’s investment and the amount of internally generated funds available for reinvestment for that year is given below. Calculate the dividend per s..

  Suppose the call money rate

Suppose the call money rate is 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 700 shares at $61 per share with an initial margin of 30 percent. One year later, the stock is selling for $66 per share, and you close out your positi..

  Cost of common equity and wacc

Patton Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 13% and its marginal tax rate is 40%. The current stock price is P0 = $22.50. The last dividend was D0..

  What is after-tax cash flow from the sale of the machinery

Your firm purchased machinery with a 7-year MACRS life for $10.60 million. The project, however, will end after 5 years. If the equipment can be sold for $5.10 million at the completion of the project, and your firm’s tax rate is 35%, what is the aft..

  Form of the efficient markets hypothesis

The _________ -form of the efficient markets hypothesis says that you cannot consistently "beat the market" (earn an annual rate of return greater than you would have earned had you invested in the S&P 500 stock index) by studying SEC filings, financ..

  What rate would you expect to see on treasury bill

Suppose the real rate is 2.9 percent and the inflation rate is 4.5 percent. What rate would you expect to see on a Treasury bill?

  Zero coupon bonds to get duration neutral

What position would you need to take in 20-year zero coupon bonds to get duration neutral?

  Borrow whatever is outstanding on your current mortgage

You plan to borrow whatever is outstanding on your current mortgage. How much do you owe on the mortgage? today?

  What are the current carrying costs

Louise Manufacturing uses 2,200 switch assemblies per week and then reorders another 2,200. The relevant carrying cost per switch assembly is $8.50, and the fixed order cost is $1,100. What are the current carrying costs?

  What is its return on equity

Needham Pharmaceuticals has a profit margin of 5.5% and an equity multiplier of 2.2. Its sales are $110 million and it has total assets of $54 million. What is its Return on Equity (ROE)?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd