The firms marginal tax rate

Assignment Help Financial Management

Reference no: EM131070983

Kinky Copies may buy a high-volume copier. The machine costs $60,000 and will be depreciated straight-line over 5 years to a salvage value of $10,000. Kinky anticipates that the machine actually can be sold in 5 years for $22,000. The machine will save $10,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $5,000. The firm’s marginal tax rate is 35%, and the discount rate is 11%. (Assume the net working capital will be recovered at the end of Year 5.) Calculate the NPV. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV $ Should Kinky buy the machine? Yes No

Reference no: EM131070983

Questions Cloud

Provide an overview of the purposes of job analysis : Provide an overview of the purposes of job analysis and Discuss key points about the tasks comprising job analysis.

Earnings before interest and taxes remains the same : Gatwick Ltd. has after tax profits (net income) of $1,000,000 and no debt. The owners have a $10 million investment in the business. If they borrow $3 million at 10% and use it to retire stock, how will the return on their investment (equity) change ..

Effect of the sale on the total amount : A vacant lot acquired for $115,000 is sold for $298,000 in cash. What is the effect of the sale on the total amount of the seller's (1)assets, (2)liabilities, and (3)stockholders' equity?

Investors think about the risk of individual stocks : Should portfolio effects impact the way investors think about the risk of individual stocks? Question B Stocks, stock valuation, and stock market equilibrium are all components of interest to potential investors. Briefly describe the legal rights and..

The firms marginal tax rate : Kinky Copies may buy a high-volume copier. The machine costs $60,000 and will be depreciated straight-line over 5 years to a salvage value of $10,000. Kinky anticipates that the machine actually can be sold in 5 years for $22,000. The firm’s marginal..

What is a brick and mortar part of a company : What is a brick and mortar part of a company? What are some benefits of integrating the brick and mortar part of an organization with their Internet business?

Effective human resource management : Organizations can effectively reduce unethical corporate behavior through effective human resource management that creates open channels of communication.

Michael hubbard-self-interest and ethics : Over the past few months there has been scrutiny over the speaker of the Alabama House of Representatives, Michael Hubbard, for multiple ethics violations. In 2014 he was issued 23 felony ethics violations and his trial began at the end of May 201..

Accurate when taking a physical inventory count : 1. Why is it important to be accurate when taking a physical inventory count? 2..Find an article pertaining to Chapter 8: Sarbanes-Oxley, Internal Controls, and Cash and post it under this thread by Thursday.

User Account

All Pages