User Account

All Pages

Should you purchase the loader

Assignment Help Financial Management
Reference no: EM131327554

Your company is looking to purchase a loader at a cost of $120,000. The loader would have a useful life of 5 years with a salvage value of $12,000 at the end of year five. (The salvage value is what you can sell the equipment for in year 5 and would represents a cash inflow.) The loader can be billed out at $95.00 per hour. It costs $55.00 per hour to operate.

Using 1200 billable hours per year determine the net present value for the purchase of the loader using a cost of capital (discount rate) (r) of 20 percent. Should you purchase the loader? (Ignore depreciation)

Hint: Draw your timeline, how much profit (revenue less costs which in this case will be the cash flow you will need for your time line.) will your firm realize from the loader?

Reference no: EM131327554

Questions Cloud

Create a human resources department for the organization : Identify at least three (3) factors that need to be considered in the formulation of this department.Include at least four (4) different disciplines that are in the structure of a Human Resources Department and a brief description of each.Explain h..
Why has the state type system expanded to encompass most : Why has the state type system expanded to encompass most of the globe today? Explain how band, tribe, and chiefdom organizations might persist within a world order based primarily on states.
Where is the point of equilibrium and what does it determine : As part of a marketing research committee for your organization, you have been assigned the task of preparing a 700-word research paper about current microeconomic thought and theory.
What is mirr for this project using the discounting method : A mining company plans to mine a beach for rutile. To do so will cost $10 million up front and then produce cash flows of $3 million per year for five years. At the end of the sixth year the company will incur shut-down and clean-up costs of $2 milli..
Should you purchase the loader : Using 1200 billable hours per year determine the net present value for the purchase of the loader using a cost of capital (discount rate) (r) of 20 percent. Should you purchase the loader?
Relationship between psychology and christianity : This paper is the capstone project of the course, and it will describe your approach to the relationship between psychology and Christianity. You will classify your approach and note the strengths and limitations of your view as well as reflect on..
How much cash will you have from cash sale when you leave : You purchased a house for 200,000 $ financed by a loan 6% and quarterly payments over 10 years, at the end of the 6th year a change of employment forces you to leave the country and you can sell the house for 250000. How much cash will you have from ..
Two types of drivers-high-risk drivers-low and risk ones : Suppose that there are only two types of drivers: high-risk drivers, who have a higher chance of accidents, and low-risk ones who have a lower chance of accident. Suppose also that car insurance companies cannot tell apart these two groups (for examp..
Firm has four open positions on its board of directors : A firm has four open positions on its board of directors. How many shares do you need to own to guarantee your own election to the board if the firm has 387,500 shares of stock outstanding and uses cumulative voting? Each share is granted one vote.

Reviews

Write a Review

Financial Management Questions & Answers

  Upon termination of employment contract

Upon termination of an employment contract, describe the employee’s entitlement with respect to his or her end-of-service gratuity? What are the differences in end-of-service gratuity between an expatriate and Emirati employee under the UAE Labor Law..

  Using a minimum of seven financial ratio compare

Using a minimum of seven financial ratio compare the 2012, 2013, and 2014 yearend financial results of the following corporation: Walt Disney corporation, Oracle corporation, Ford motor company

  Extended disbursement float-disbursement schedule

If average daily remittances are $1 million, and "extended disbursement float" adds 10 days to the disbursement schedule, how much should the firm be willing to pay for a cash management system if the firm earns 11% on excess funds.

  Present value of a perpetuity

Present value of a perpetuity. What is the present value of a $400 perpetuity if the interest rate is 6%? Round your answer to the nearest cent.

  The bonds make semiannual payments and have par value

Bond Prices [LO2] Sqeekers Co. issued 15-year bonds a year ago at a coupon rate of 4.1 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5percent, what is the current bond price?

  What is the NPV of the project at Stage

At Stage 2 of the decision tree it shows that if a project is successful, the payoff will be $53,000 with a 2/3 chance of occurrence. There is also the 1/3 chance of a −$24,000 payoff. The cost of getting to Stage 2 (1 year out) is $24,000. The cost ..

  Forward rate be to make it profitable for trading

The spot exchange rate for the Canadian dollar on December 31, 2014 was 1.1583 C$/US$, while the 3 month Euro-rates on December 31st were quoted at 1.185% per annum and 0.31% per annum for the Canadian and U.S. dollars respectively. What should the 3..

  Injecting huge liquidity and there is no fear of inflation

We have the Fitzpatrick bond which has a convexity of 30, duration of 4, a ytm of 12% and a maturity of 25 years. The central bank is injecting huge liquidity and there is no fear of inflation. If the yields alter by 100 basis points, what would the ..

  Calculate the consumer gain from removing the duty

Calculate The consumer gain from removing the duty. - Calculate The producer loss from removing the duty. - Calculate The government tariff revenue loss.

  Weighted average that implied by two outstanding debt issues

Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $72, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate..

  What are the estimated dividend yield-capital gains yield

What are the estimated dividend yield, capital gains yield, and total return for 2014, 2015, 2016, 2017, and 2018? Why do the dividend yield and capital gains yield change every year? What do you notice about the total return?

  Reaching financial goal

Reaching a Financial Goal You need to accumulate $10,000. To do so, you plan to make deposits of $1,100 per year - with the first payment being made a year from today - into a bank account that pays 10.86% annual interest. How many years will it take..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd