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Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $520,000. Of this sum, $62,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible first-year deductible expense or as a capital investment. In the latter case, the company could depreciate the $62,000 using the five-year MACRS tax depreciation schedule. Assume the tax rate is 35% and the opportunity cost of capital is 7%. Calculate the value of the tax shield 1 and tax shield 2. (Note: Use Tax shield 1 as an expense treatment and tax shield 2 as 5 year MACRS.) (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
What is the market value placed on a firm in which an entrepreneur invests $1 million and a venture capitalist invest $3 million in first-stage financing for a 50% interest in the firm?
Suppose you own 2000 common shares of Laurence Incorporated. The EPS is $10.00, the DPS is $3.00, and the stock sells for $80 per share. Laurence announces a 2-for-1 stock split. what will the adjusted EPS and DPS be, and what would you expect the ..
Next year dividend for ERT stock is expected to be $4. You expect it to be $4 in next two years, also, but then you expect it to increase at an 8% yearly rate forever.
Make a executive summary in which you recognize and discuss three to five evolving trends which influence innovation.
the gamma and vega of a delta neutral portfolio are 50 per $ and 25 per %, respectively. Estimate what happens to the value of the portfolio when there is a shock to the market casuing the underlying asset price to decrease by $3 and its volatilit..
Corporations must identify its capital needs prior to assessing appropriate capital structure. The next step is for the firm to undertake all considerations in finishing necessary analysis to ensure its capital structure is suitable.
Calculate the initial investment, operating cash flows and terminal cash flows.
The firm has a tax rate of 30 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $57,000 at the beginning of the project. What will be the net cash flow for year one of this project?
Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10%, and there are no leakages in the system.
Describe how monetary policy helps to sustain economic growth and smooths out the swings in the business cycle. Examine the ways in which monetary policy can influence a nation's economic goals of achieving full employment, controlling inflation, s..
Summarize an article (or series of articles) regarding the country risk engaged by an MNC during the past five years. What key concepts from the assigned reading apply?
explain the decision-making process used by consumers. as a consumer, how have social, psychological, and enconomic factors influence your buying behavior?
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