Reference no: EM131354345
The Nullcom Inc. is considering to purchase a new machine. The cost of the machine is $200,000 and installation of $10,000. The machine will be depreciated straight-line to zero. The new machine needs an increase of new working capital of $30,000. Nullcom expects an increase of revenues of $140,000 and increases of expenses of $45,000. Nullcom expects to sell the machine for $25,000 at the end of year 3. The marginal tax rate is 40% and the cost of capital is 8%.
What is the cost today?
What are the depreciable value of the equipment over 3 years?
What are the net operating cash flows for years 1, 2 and 3? Hint: all cash flows are the same.
What is the terminal cash flow?
|
Leaving the irr the same for moderate risk projects
: Meds R Us has just finished evaluating several projects. Their cost of capital is 10%. NPV’s are calculated by the firm’s current cost of capital. Meds R Us now performs a risk assessment of the projects. They adjust for project risk by raising the c..
|
|
Finished evaluating several projects
: Meds R Us has just finished evaluating several projects. Their cost of capital is 10%. NPV’s are calculated by the firm’s current cost of capital. If Meds R Us has a Capital Budget limit of $120,000, and assuming the projects are of the same risk, wh..
|
|
Determine the proceeds of the bond issuance assuming
: On January 1, 2016, the Blue Devil Corporation issued $20,000,000 of ten-year bonds. The bonds carried a stated interest rate of 5 percent, with interest payable semiannually on June 30 and December 31. Using the Excel PV function, determine the proc..
|
|
What will be after-tax cash flow of this sale
: Suppose you sell a fixed asset for $126,000 when its book value is $146,000. If your company’s marginal tax rate is 40 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
|
|
What are the depreciable value of the equipment
: The Nullcom Inc. is considering to purchase a new machine. The cost of the machine is $200,000 and installation of $10,000. The machine will be depreciated straight-line to zero. The new machine needs an increase of new working capital of $30,000. Wh..
|
|
Analyzing the cost of debt for firm
: You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.2 percent coupon bonds are selling at a price of $776.45. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answ..
|
|
What are the depreciable value of the equipment
: The Nullcom Inc. is considering to purchase a new machine. The cost of the machine is $200,000 and installation of $10,000. The machine will be depreciated straight-line to zero. The new machine needs an increase of new working capital of $30,000. Wh..
|
|
What is the aftertax cost of the company debt
: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. Bond Coupon Rate Price Quote Maturity Face Value 1 8.70 % 105.2 7 years $ 22,000,000 2 7.00 95.2 10 years 42,000,000 3..
|
|
What is price per share of company stock
: Ward Corp. is expected to have an EBIT of $2,500,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $177,000, $109,000, and $127,000, respectively. What is the price per share of the company's st..
|