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A proposed cost-saving device has an installed cost of $664,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. The required initial net working capital investment is $53,500, the marginal tax rate is 34 percent, and the project discount rate is 13 percent. The device has an estimated Year 5 salvage value of $78,500.
Required:
What level of pretax cost savings do we require for this project to be profitable? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g.,32.16).)
Pretax savings $
Explain why Believer believes this lease should be categorised as a finance lease. You should refer to relevant international accounting standards to justify your answer.
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The payback period is not concerned with
A proposed project has fixed costs pf $100,000 per year. The operating cash flow at 8,000 units is $89,000. Ignoring the effect of taxes, what is the degree of operating leverage? Round answer to 4 decimal places. If units sold rise from 8,000 to 8,5..
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You invest in a stock with the following probability distribution of returns: A probability of .15 that the return will be 16%; a probability of .35 that the return will be 24%; a probability of .3 that the return will be -40%; and a probability of ...
Tri-coat Paints has a current market value of $34 per share with earnings of $1.66. What is the present value of its growth opportunities (PVGO) if the required return is 5%?
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