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Your career as the administrator at Alpine Ambulatory Surgery Center continues with some decisions on replacing capital equipment. The anesthesiologist has let you know that the anesthesia machine in one of your three (3) operating rooms has failed. Repairs for the anesthesia machine can be made at a cost of $18,000 and will have a warranty to work for at least one more year. It is currently generating $8,000 a year in cash inflows and would expect to be at that level for at least the next four (4) years.
Replacing the unit would cost $55,000 and it would last for seven (7) years. You can get $4,000 in trade in for your current malfunctioning unit if you buy a replacement and could sell the replacement for $8,000 at the end of its seven year expected life. Your accountant estimates that the project will have the following annual cash inflows:
Year 1: $10,000
Year 2: $12,000
Year 3: $14,000
Year 4: $16,000
Year 5: $18,000
Year 6: $18,000
Year 7: $18,000
Your cost of capital is 7%.
Using this data, make a recommendation on repair/replacement of the anesthesia machine. You must show a calculation to support your recommendation. Recommendations without justifications (including some math) will not be accepted.
Describe various forms of internal and external threats to an organization. Describe methods to detect internal and external threats to the organization. Evaluate methods to protect the organization from internal and external threats.
The IRR of this 20-year project is 12.29%. If the firm's WACC is 9%, what is the project's NPV?
At January1,2013 Myco Corporation had outstanding the following securities: $1,000,000, 5% cumulative convertible preferred shares,$50 par; each share is convertible into 2 shares of common stock. 7% convertible bonds, $2,000,000 face value issued at..
The tax rate is 30 percent and the required return on the project is 12 percent. What is the operating cash flow for the project in year 2?
If a company holds its diversified portfolio the small portion of stocks of another company, that conducts operating activities in the same industry, than these assets are considered to be operating assets?
Boatler Used Cadillac Co. requires $1,030,000 in financing over the next two years. The firm can borrow the funds for two years at 10 percent interest per year. Determine the total two-year interest cost under each plan. Short-term variable-rate pla..
Suppose in 2015, the Republican leadership in the House proposes that ALL bond interest income be exempt from federal income taxes, NOT just municipal bond interest. Explain why governors (the majority of which are Republican) might be opposed to suc..
Calculate the indicated ratios for Happy Hamburger.- Discuss Happy Hamburger's strengths and weaknesses as revealed by your analysis.
North Side Wholesalers has sales of $948,000. The cost of goods sold is equal to 72 percent of sales. The firm has an average inventory of $23,000. How many days on average does it take the firm to sell its inventory?
Calculating returns: Last year you bought a share of 7.25 percent preferred stock for $63.75. Your stock's market price is now $66.92. Calculate your total return for last year.
Bui Corp. pays a constant $13.60 dividend on its stock. The company will maintain this dividend for the next nine years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share price?
The cash conversion cycle of a firm is presented below. What conclusion is BEST supported by this information? The firm's efforts to reduce the days of sales in inventory are paying off. The firm's credit terms appear lenient, resulting in few days o..
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