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Your company just replaced its high-end CNC machine at a cost of $120,000. It will have a useful life of 10 years and a salvage value of $30,000. However, the company may decide to sell it before the end of its’ useful life. Therefore, they want to maximize the depreciation expense.
a) If they begin using the SOYD method and want to maximize the total depreciation expense, and therefore switch to the SL method at the appropriate time, in which year should they switch to the SL method?
b) Assuming they switch from the SOYD method to the SL method what is the total accumulated depreciation at the end of year 8 and the book value of the machine at that time?
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Holdup Bank has an issue of preferred stock with a $4.95 stated dividend that just sold for $86 per share. What is the bank’s cost of preferred stock?
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You can invest in asset 1 with μ1 = 0.1, σ1 = 0.3 and asset 2 with μ2 = 0.2, σ2 = 0.5, with correlation ρ = 0.2. Find the minimum variance point and the portfolio strategy that attains it. Repeat the previous problem if a risk-free asset with return ..
how much must be deposited now into an account that will average 8% annually in order to save the $150,000?
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To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semi annually, sells at a price of $1,075, and has a par value of $1,000..
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Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $430,000 on sales of $1,100,000. Compute the company’s residual income for..
Sam’s Discount Appliance Company just received a shipment of 30 washing machines. local advertising and point-of-sale displays.
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