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Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $26,500, and the company expects to sell 1,500 per year. The company currently sells 2,000 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,820 units per year. The old board retails for $22,400. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,450,000 per year, and fixed costs are $1,350,000 per year. Required: If the tax rate is 38 percent, what is the annual OCF for the project? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount)
A parent holding company sells shares in its subsidiary such that the parent now owns only 65% of the subsidiary and, thus, the tax returns of the parent and its subsidiary can't be consolidated. The parent receives annual dividends from the subsidia..
You must evaluate a proposal to buy a new milling machine. the base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. What ..
The correlation between stocks A and B is equal to the:
Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 3% and the market risk premium is 4%. Van Buren currently expects to pay a year-end dividend of $1.65 a share (D1 = $1.65). Van Buren..
Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D1 = $2.50), and the dividend is expected to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.50%, and the tax rate is..
Morning Star has credit sales of $914,900, cost of goods sold of $764,800, average accounts receivable of $121,300, and average accounts payable $127,600. On average how long does it take for the firm's credit customers to pay for their purchases?
Today, John borrowed $40,000 from the bank. His initial plan is to pay his entire principal and interest amount in 48 months. He plans to pay some extra payment for the first year to pay off the debt earlier. As an excel programming trainer, Write a ..
Consider a four-year project with the following information: initial fixed asset investment = $410,000; straight-line depreciation to zero over the four-year life; zero salvage value; Degree of operating leverage, What is the degree of operating leve..
The beer industry is characterized by high fixed costs. If a brewery is operating below capacity, this likely means that it can lower the average cost of the beer it is brewing. Which of the following reasons to 'go global' does this concept align wi..
Operating a business in an ethical manner takes time, effort and commitment. What are the key elements to a company having successful organizational ethics? What can we do as managers to encourage ethical behavior and to raise ethical standards in ou..
Lloyd and Harry Limo Service, Co. is currently operating at 92% of fixed asset capacity. Fixed assets on the balance sheet are $593,000. Current sales are $640,000, and are projected to grow to $792,000. How many in new fixed assets are required to s..
Pearson Brothers recently reported an EBITDA of $9.5 million and net income of $2.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 30%. What was its charge for depreciation and amortization? Write out your answer com..
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