Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Edward's Manufactured Homes is considering replacing some machines. Edward’s purchased the current machinery 2 years ago for $320. The company is considering replacing this machinery today with newer machines that utilize the latest in technology. The new machines will cost $400, plus an additional $15 for installation. We will shut down production in 4 years. The old machines can be sold for $140 to a foreign firm for use in its production facility in South America. Both machines are classified as 5-year property for MACRS. The old machines will have expected salvage value of $0 in four years.
Annual sales, due to the new machine’s increased production, will increase from $1500 to $1520. The new machines are more efficient and should lower net annual variable operating costs by $35. Annual Fixed costs will remain the same at $700. Over the past two years, Edward’s has spent $13 testing the various available machines. In 4 years, we estimate that the value of the new machines to be $125. We currently have $75 in working capital invested in the project, which is not expected to change if we buy the new machine. The firm’s tax rate is 35%. The cost of capital is 12%.
a. What are the initial (year 0) cash flows?
b. What are the operating cash flows in year 2?
c. What are the terminal cash flows in year 4?
Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in this and in all future rounds. For simplicity, assume that the demand increase and margins will remain at last year's levels...
Booher Book Stores has a beta of 1.43. The yield on a 3-month T-bill is 5.00% and the yield on a 10-year T-bond is 6.45%. The market risk premium is 6.60%. What is the estimated cost of common equity using the CAPM?
The "financial leverage multiplier" is affected by:
Suppose a company has next year earnings of 100k, ROE 10%, and discount rate of 20%. What is the optimal payout ratio? What is the value destruction if the managers payout 50% of earnings?
The operating cost of a new machine is $500 for the first year. Starting the second year, the operating cost increases by $200 per year for the next 10 years. Calculate the equivalent annual operating cost of the machine. What will be the present and..
The company’s net income was $8,912 with a tax rate of 34%. The firm paid $3,987 in total expense with a depreciation of $4,873. What was the company’s cash coverage ratio?
Jensen's Travel Agency has 10 percent preferred stock outstanding that is currently selling for $34 a share. The market rate of return is 12 percent and the firm's tax rate is 34 percent. What is Jensen's cost of preferred stock?
what is the financial conditionds of the casino industry and What financial opportunities do exist in the casino industry
Rhodes Company’s balance sheet showed total current assets of $12,500, all of which were required in operations. Its current liabilities consisted of $2,868 of accounts payable, $1,765 of 6% short-term notes payable to the bank, and $735 of accrued w..
A stock price is currently $50. Over each of the next two six-month periods it is expected to go up by 15% or down by 10%. The risk-free interest rate is 5% per annum with continuous compounding. What is the value of a one year European put option wi..
You own a 5-year bond with a face value of $1,000 and a coupon rate of 10 percent with annual payments. The bond is currently worth $1,216.47. If market interest rates remain unchanged, what will be the value of the bond when there are only 3 years l..
The lack of historical data makes it difficult to create a forecast and budget for a new company. Class, how many years of historical sales data do you think are necessary in order to create an accurate forecast of sales? Explain.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd