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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. The applicable depreciation rates are 33%, 45%, 15% smf 7%. The machine would require a $5,500 increase in net operating, working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $44,000 per yeaer. The marginal tax rate is 35% and the WACC is 12%. The firm spent $5,000 last year investigating the feasibility of using the machine. a. how should the $5,000 spent last year be handled? b. what is the initial investment outlay for the machine for capital budgeting purposes, that is what is the yaer 0 project cash flow?c. What are the project's annual cash flows during years 1, 2, ,and 3? Should the maching be purchased? Explain your answer.
How much would you expect to receive for a nominal interest rate in Spain if funds can be invested in the U. S. at a rate of 7 % when inflation is expected to be 2.5 % in the U. S. and 7 % in Spain?
On average, your firm sells $26,600 of items on credit each day. The firm's average operating cycle is 43 days and it acquires and sells inventory, on average, every 26 days. What is the average accounts receivable balance?
The inflation rate in Great Britain is expected to be 4 percent per year, and the inflation rate in Switzerland is expected to be 6 percent every year. If the current spot rate is £1 = 12.50,
What is the book value per common share equation? The textbook we are using doesn't give us the actual equation for this... I'm a little rusty in my accounting as I have taken accounting in about 2 1/2 years.
The cost of identical machines with a life of 9 years is $1.93 million. Assume the opportunity cost of capital is 8 percent. What is the opportunity cost of adding petite sizes.
An investment opportunity offers to pay out $116 two years for now. In order to receive this payout, you must invest $81 today. What annual rate of return is this investment offering? Put your answer in decimal form and round to four decimal pl..
Consider a service provider that is in the delivery business, such as UPS or FedEx. How can the principles of MRP be useful to such a company?
Find what is the approximate value of this investment today if the appropriate discount rate is 9% per year and final payment of interest and principal at the end of the four month
A small business is receiving a five-year $1,000,000 loan at a subsidized rate of 3% per year. Calculate the NPV of the loan.
A 5.85 percent coupon bond with 18 years left to maturity is offered for sale at $1,055.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.)
Write down a guide for a 2- to 4-page paper comparing capital and operating leases (similarities and differences) and describe how each are classified on financial statements. Discuss how their classification and the changes in how they were repo..
A potential creditor's judgment about granting credit would be most influenced by the potential customer's, Which of the following is not a category of financial statement ratios?
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