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The Ajax Corporation has an overhead crane that has an estimated remaining life of 10 years. The crane can be sold now for $8,000. If the crane is kept in service, it must be overhauled immediately at a cost of $4,000. After the crane is overhauled, O&M costs will be $3,000 in the first year and will escalate at 5%/year thereafter. The overhauled crane will have zero MV at the end of the 10-year study period. A new crane will cost $25,000, will last for 10 years, and will have a $4,000 MV at that time. O&M costs are $1000 in the first year and will escalate at 2%/year thereafter. The company uses a before-tax MARR of 10% in evaluating investment alternatives.
Should the company replace the old crane?
Does the decision change if the new crane has zero salvage value? Use PW analysis
ABC collects 16 percent of its sales in the month of sale and the remainder is collected in month. What is the amount of the March cash collection?
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A frim with fix rate debt that expects interest rates to fall may engage in a swap agreement to:
what is the aftertax salvage value of the asset?
You are the portfolio manager for a mutual fund. Your fund has an expected return of 15% with a standard deviation of 24% and the T-bill rate is 3%. Calculate the weight w. What is the standard deviation of the rate of return on the new portfolio?
You can have a regular annuity of 3 payments of $706 each year, or you can receive the same payments as an annuity due. Which one is more valuable? To answer this, calculate the present value of the annuity due and subtract the present value of the r..
(Terminology) Define each of the following dates and place them in their proper order with respect to the payment and receipt of cash dividends: date of record, ex-dividend date, declaration date, and payment date.
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