What is the cash outflow at time

Assignment Help Financial Management

Reference no: EM131072654

Pierre Imports is evaluating the proposed acquisition of new equipment at a cost of $90,000. In addition the equipment would require modifications at a cost of $10,000 plus shipping costs of $2,000. The equipment falls into the MACRS 3-year class, and will be sold after 3 years for $35,000. The equipment would require increased inventory of 6,000. The equipment is expected to save the company $35,000 per year in before-tax operating costs. The company's marginal tax rate is 30 percent and its cost of capital is 11 percent. a. What is the cash outflow at Time 0?

Reference no: EM131072654

Questions Cloud

Which statement is true about a non-static inner class : Which statement is true about a non-static inner class? Clicking the closing button on the upper-right corner of a frame generates a(n) _____ event.

Write a discussion that reflects your understanding : Write a discussion that reflects your understanding of the readings -"HANDBOOK OF ETHNOGRAPHY by Paul Atkinson, Amanda Coffey, Sara Delamont, John Lofland and Lyn Lofland". It should be no 350-450 words.

Calculate the cash-flow break even quantity : Consider the following production-oriented project. The units produced will sell for $28/unit and can be produced at a variable cost of $20/unit. Fixed costs are $80,000. The purchase price for the project is $200,000, depreciable down to zero over a..

Calculate the operating cash flows of the project : Laurel’s Lawn Care, Ltd., has a new mower line that can generate revenues of $129,000 per year. Direct production costs are $43,000, and the fixed costs of maintaining the lawn mower factory are $16,500 a year. The factory originally cost $0.86 milli..

What is the cash outflow at time : Pierre Imports is evaluating the proposed acquisition of new equipment at a cost of $90,000. In addition the equipment would require modifications at a cost of $10,000 plus shipping costs of $2,000. What is the cash outflow at Time 0?

Which assumed the existence of corporate income taxes : Modigliani and Miller's second article, which assumed the existence of corporate income taxes, led to the conclusion that a firm's value would be maximized, and its cost of capital minimized, if it used (almost) 100% debt. However, this model did not..

Define performance measures and designate students : Have the students act out the operation of the drive through window of a fast food restaurant in the following steps. a. Enter line of cars

What is the value of the firm-repurchase shares : Bruce & Co. expects its EBIT to be $69,000 every year forever. The firm can borrow at 5 percent. Bruce currently has no debt, and its cost of equity is 11 percent. If the tax rate is 35 percent, what is the value of the firm? What will the value be i..

Stock with an exercise price : A call option on Jupiter Motors stock with an exercise price of $85 and one-year expiration is selling at $3. A put option on Jupiter stock with an exercise price of $85 and one-year expiration is selling at $1.5. If the risk-free rate is 9% and Jupi..

User Account

All Pages