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The Perez Company has the opportunity to invest one of two mutually exclusive machines that will produce a product it will need for the forseeable future. Machine A costs $11 million but realizes after-tax inflows of $5 million per year for 4 years. After 4 years the machine must be replaced. Machine B costs $13 million and realizes after-tax inflowa of 3.5 million per year for 8 years after which it must be replaces. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in machines. The cost of capital is 14%.
a.) By how much would the value of the company increase if it accepted the better machine? Enter your answer in millions. For example, an answer of 1.2 million should be entered as 1.2 million not 1,200,000. Round your answer to two decimal places.
What is the Equivalent annual annuity for each machine? Round your answer to two decimal places
Is there an arbitrage opportunity, if so, show the gain on the arbitrage.
Given that accounts receivable represents a delay in the receipt of cash that could be put to good use, why do firms allow credit purchases at all?
A portfolio has a variance of ri .017424, a beta of 1.06, and an expected return of 13.15 percent. What is the Sharpe ratio if the expectedsk-free rate is 3.4 percent?
A financial analyst calculate that the after-tax salvage value for amachine was $10,200. The current book value of the asset is $12,000 and the firm's rate is 30%. How much could the machine be sold for today?
Find out an estimate of the risk-free rate of interest, krf. To obtain this value, go to Bloomberg.com and use the U.S 10 year treasury bond rate as the risk free rate.
An investment offers a 13 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 7 percent.
What is the discount factor for $1 to be received in 5 years at a discount rate of 8%? A. .4693 B. .5500 C. .6000 D. .6806
At the end of the year, a U.S. company has expected cash flows of ¥1,000,000 from Japanese operations, CHF200,000 from Swiss operations, and €350,000 euros from German operations.
You worked out a deal with your friend to pay the balance off in five equal payments over the next 5 years, plus 10% compound interest on the unpaid balance at the end of each year. How much will you pay your friend each year?
Make a financial analysis on Avon Products Corporation to include liquidity, efficiency, and profitability ratios, asset management, debit management, and market returns from the last yearly report.
is it true that an option can never sell for lessthan you can make by exercising the option
Being in the program is so muc fun, you are willing to to pay a net of $5,000 for the pleasure. What is the net cost of the education to you?
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