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Question - A firm believes it can generate an additional $250,000 per year in revenues for the next 5 years if it replaces existing equipment with new equipment that costs $210,000. The firm expects to be able to sell the new equipment when it is finished using it (after 5 years). The existing equipment has a book value of $20,000 and a market value of $12,000. Variable costs are expected to total 40% of revenue. The additional sales will require an initial investment in net working capital of $15,000, which is expected to be recovered at the end of the project (after 5 years). Assume the firm uses straight line depreciation. The firm's marginal tax rate is 30%.
a) What is the required initial investment (at t = 0)?
b) What is the annual operating cash flow?
c) What is the end of project cash flow?
SCC Bhd needs $4 million to built a new assembly line. The target debt to equity ratio is 1.0. It is expected to generate after tax cashflow of $500,000 per tear forever.
Analyze the main factors that an organization should consider in determining the required rate of return for evaluating projects in global markets and the impact that this will have on decision making.
on january 1 2010 gant corporation had 1500000 of common stock outstanding that was issued at par and retained earnings
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MSA Computer Corporation manufactures two models of minicomputers,the Alpha 4 and the Beta 5. Determine the most profitable number of Alpha-4 model of minicomputer to produce during the coming month.
If the partnership distributes $30,000 cash to Lauren on June 30 of the current year, how much cash is distributed to each partner in the liquidating distribution under the economic effect test?
What is Disney assuming about the willingness to pay of Florida residents? Why might it make this assumption? How might Disney keep Florida residents from buying Walt Disney World tickets at discounted prices and reselling them to non-Florida reside..
Honeycomb is a public sector biological research laboratory in UK. Its objective is to apply the latest scientific research to the development of new drugs. After a new drug is developed, Honeycomb may either produce the drug itself or license it t..
The introductory section of a CAFR typically includes all of the following except
given the following information compute the current and quick ratioscash 100000accounts receivable 357000inventory
Can Orlando hold Max liable for his injuries?- Would your answer be different if Orlando had rented the edger from Max and paid a fee?
Describe the effect of each transaction on assets, liabilities, and stockholders' equity. Analyze the effect of transactions on assets
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