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Question: Coiner Clothes is contemplating the replacement of one of its knitting machines with a newer, and more efficient one. The old machine has a book value of $600,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to another firm in the industry for $265,000. The old machine is being depreciated by $120,000 per year, using the straight- line method. The new machine has a purchase price of $1,175,000, an estimated useful life MACRS class life of 5 years, and an estimated salvage value of $145,000. The applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. The new machines is expected to save on electric power usage, labor and repair costs, as well as to reduce the number of defective articles of clothing. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and it has a wacc of 12%. Should the firm purchase the new machine? Clearly support your answer
Calculate the total dollar return for the stock, using the adjusted close price, if you bought 100 shares of the stock over the past 15 years. What was the total percent return using the information from the preceding question?
1. What are financial ratios and why are they useful? 2. What are the three types of comparisons that can be made when conducting ratio analyses?
The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over..
Morton Industries is planning opening a new subsidiary in Boston, to be operated as a separate corporation. The corporation's financial analysts expect the new facility's average EBIT level to be $6 million per year.
Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.6. Assuming the market value of debt equals its book value.
Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs and externalities should be included. Give an example of each.(briefly)
What is the standard deviation of the returns on a stock given the following information?
The team developing the proposal estimated that variable cost and sales volume may each turn out to be as much as 10% higher or 10% lower than the initial estimate. To complete this assignment, you are to submit a four to five page paper that i..
during the asian crisis in 1998 there were rumors that china would weaken its currency the yuan against the u.s. dollar
Summarize the finding according to this article. Do you have any reason to doubt that this information is accurate?
What discount rate should be used to discount the estimated cash flows and tax shields in Years 1-5 to discount the horizon value? b. What is the dollar value of Conroy's operations? If Conroy has $10 million in debt outstanding, how much would Marst..
How much money do you need to put in a money market fund today earning a nominal 6% a year to fund your literature expenses a) forever and b) for the next 6 years?
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