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GMBA Ltd is considering installing a new bottling machine that costs $170,000 plus installation costs of $30,000. The new machine will generate cash revenues of $260,000 annually and has associated cash expenses of $145,000 per annum. The machine itself will be depreciated to a salvage value of $20,000 over a 12-year period using the straight-line depreciation method. At the end of the 12th year, the machine will then be sold for $16,000. The corporate tax rate is 35% per annum. The project's after-tax required rate of return is 6% per annum. Should GMBA Ltd accept this project? Why?
What minimum amount of annual cash inflow do you need if your firm has an 8% cost of capital? If the project is forecast to earn $12,500 per year over the 5 years, what is its IRR? Is the project acceptable?
If the tax rate is 40 percent, what is the annual OCF for the project?
The stock's required rate of return is 12 percent and the stock's dividend is expected to grow at the same constant rate forever. What is the expected price of the stock six years from now? Show your calculations.
Discuss three reasons why networking can lead to a more productive and effective workplace environment.
The underwriters' spread is 6.5 percent. How many shares of stock must Plasti-tech sell to meet its financing need?
Figure 5.11 demonstrates the efficiency implications of using cap-and-trade versus an emissions fee when costs are higher than expected and marginal social.
Discuss why the statement of cash flows represents an important tool for the financial statement user. Why is balance important between different financing.
Its total invested capital is $18,000,000 and its after-tax percentage cost of capital is 7%. What is the firm's EVA?
What is your stock's average return for the last 3 years? Is this average return higher or lower than the Expected Return obtained from CAPM
Explain what is meant by market efficiency and efficient market hypothesis and describe the following:
If Amazon uses straight-line amortization, what is the carrying value of 2012 bonds after the first interest payment?
(Cost of common equity) Falon Corporation is issuing new common stock at a market price of $27.32. Dividends last year were $1.39 and are expected to grow at an annual rate of 8.4 percent forever. What is Falon's cost of common equity capital?
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