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The acme company has a new product line that will be running for only 4 years. They bought a lathe two years ago when the product line began for $160,000. it is begining as a 3-year property according to the federal government . This lathe generates $98,000 a year in gross income and costs $2,000 a year to operate. Acme is considering selling the old lathe for $200,000 at the end of this year (year 2) and replacing it with a new lathe that would be purchased in year 2 and put into services in year 3. the new lathe would cost $180,000 to buy a,, cost $4,000 per year to operate and generate $160,000 of gross income each year beginning in year 3. this lathe is also a 3-year property, and would be depreciated as such for federal taxation purpose. this lathe would be sold in year 4 for $1000,00. State taxes are 10% and federal taxes are 35%.
What is the effective tax rate?
is the depreciation charge for year 3?
what is CFAT for year 2?
Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 10 years remaining to maturity, and have a required rate of return of 11 percent.
Consider a 10-year project with the following information: initial fixed asset investment = $480,000; straight-line depreciation to zero over the 10-year life; zero salvage value; price = $34; variable costs = $15; fixed costs = $206,400; quantity so..
Compute the maximum change in total deposits that would result if deposits at financial institutions were immediately increased by $120 billion and the reserve requirement applicable to all deposits was 5%, 10% 50% 100%
Bruce & Co expects its EBIT to be $185,000 every year, forever. The firm can borrow at 9%. Bruce currently has no debt and its cost of equity is 16%. The tax rate is 35%. What is the value of the firm? What is the value of the firm if Bruce decides t..
Commercial paper is:
You are an investor in company which is an auto parts supplier. They will pay a dividend next year of $0.80 per share and are expected to grow at an annual rate of 2%. The price of the stock is currently $37.24. What is the capital gains yield?
Suppose GM is considering buying a plant in Hungary. All sales will be to Hungarian customers and denominated in forints. What is the total investment in dollars? Once the plant is up and running, what is the annual percentage return on investment? I..
MM Theory on Capital Structure has three stages in its development which assumes 1) no taxes, 2) only corporate taxes are allowed, and 3) both personal and corporate taxes are allowed (Miller’s Model)? What implications to managers of each model with..
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 12 percent, –12 percent, 19 percent, 24 percent, and 10 percent. What was the average real return on Crash-n-Burn’s stock? What was the average nominal r..
Profitability Ratios PJ's Ice Cream Parlor has asked you to help piece together financial information on the firm for the most current year. Managers give you the following information: sales = $57 million, total debt = $27 million, debt ratio = 43%,..
A clearly demarcated chain of command contains different stratification levels. This concept is evident in a ________. A: Conferred membership status B: Status HIerarchy C: Position level D: Role Status
Which of the following statements are correct concerning the variance of the annual returns on an investment?
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