Reference no: EM132940839
Question - You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $1500 initially, and then $400 per year in maintenance costs. Machine B costs $2000 initially, has a life of three years, and requires $300 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine.
1. Which is the better machine for the firm? The discount rate is 6% and the tax rate is zero.
2. What is the basic principle of finance that can be applied to the valuation of any investment?
3. What is the decision rule for the net present value technique? Briefly explain them.
4. An investment that costs $30,000 will produce annual cash flows of $10,000 for a period of 4 years. Given a desired rate of return of 8%, the investment will generate
5. As the discount rate becomes higher and higher, the present value of inflows approaches
6. How are the operating and cash cycles of the firm different? Why are they important?
7. Why do we use leverage if it increases the risk of a firm?
8. How important is it to trace costs appropriately?
9. What is cost volume profit analysis?
10. Under what circumstances is it appropriate to use the target cost concept?
|
What are the null and alternative hypothesis
: As a result of 300 mg./day of the ABC,A new drug is created to help people with depression. When testing the drug, what are the null and alternative hypothesis?
|
|
Compute the amount of cash dividends per share
: Bennett Company paid cash dividends totalling P 150.000 in 2018 and P 75,000 in 2019. Compute the amount of cash dividends per share
|
|
What is the after-tax income if hank sends client the bill
: What is the after-tax income if Hank sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.)
|
|
By how much will net income increase or decrease
: An outside supplier has offered to sell Bertrille the subcomponent for $3.25 a unit. If Bertrille accepts the offer, by how much will net income increase
|
|
What is cost volume profit analysis
: Machine A has a life of two years, costs $1500 initially, and then $400 per year in maintenance costs. What is cost volume profit analysis
|
|
Explain the activity-based costing income statement
: Explain the activity-based costing income statement and provide a hypothetical example of activity-based costing income statement in a manufacturing enterprise
|
|
Calculate the weighted average cost of capital of WWBB
: WWBB's cost of equity is 19.00%, and its cost of debt is 9.00%. WWBB face a 31.00% tax rate. Calculate the weighted average cost of capital of WWBB
|
|
What the sharpe ratio for this fund
: Assume the standard deviation and beta of the investment fund's returns over this period were 5.8% and 1.8, respectively. What the Sharpe ratio for this fund
|
|
Calculate the tax amount for fica
: Calculate the tax amount for FICA - Social security, FICA - Medicare, FUTA, and SUTA. Use the provided form on the following worksheet.
|