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Ilana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1.7 million. The lathe will cost $52,000 per year to run, but it will save the firm $172,000 in labor costs and will be useful for 10 years. Suppose that for tax purposes, the lathe will be depreciated on a straight-line basis over its 10-year life to a salvage value of $500,000. The actual market value of the lathe at that time also will be $500,000. The discount rate is 9%, and the corporate tax rate is 30%. What is the NPV of buying the new lathe? (A negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)
NPV $
During the financial crisis of 2007-2009, why did the Fed turn to quantitative easing? How has the policy of quantitative easing raised concerns of higher inflation rates in the future?
A 6.55 percent coupon bond with 25 years left to maturity can be called in six years. The call premium is one year of coupon payments. It is offered for sale at $1,105.45. What is the yield to call of the bond?
Look up Amazon (AMZN) and Ali Baba Group (BABA) stocks on yahoo finance and answer the following. Which one is more liquid? Explain. What is the enterprise value for both companies?
You see a fast growing company that is estimated to have dividend growth of 24%, 20%, and 16% over each of the next three years (24% in year 1 in year 2 20% and in year 3 16%) The company paid a dividend of $2.28 per share over the past twelve months..
The BCR corporation is considering buying a new machine at a cost of $400,000. They expect to have an annual cost savings of $120,000 at the end of each year for five years. They expect to incur maintenance insurance costs of $15,000 at the time of p..
Breakeven cash inflows The One Ring Company, a leading producer of fine cast silver jewelry, is considering the purchase of new casting equipment that will allow it to expand its product line. If One Ring requires a 9% return on its investment, what ..
Layla has owned her home for 12 years and expects to live in it for 5 more years. She originally borrowed $200,000 at 5% for 30 years to buy the home. She still owns $130,000 on the loan, interest rates have fallen to 4%, and Layla is reconsidering r..
Your firm is contemplating the purchase of a new $625,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $69,000 at the end of that time. You will save $255,000 before..
Hoosier Camper, Inc. is a manufacturer of truck campers. Its current line of truck campers are selling excellently. However, in order to cope with the foreseeable competition with other similar truck campers, HC spent $950,000 to develop a new line o..
Kirksville Company is considering a new assembly line to replace the existing assembly line. The assembly line would require using a parcel of land that cost $800,000 three years ago. What is the initial outlay associated with this project? What is t..
If an investor had purchased the security at market on February 2, 2017, and held it until it matured, what annual rate of return would she have earned?
A bond with a 12 percent quartely coupon rate has a yield to maturity of 16 percent. Based on this information, a fair price of this bond is?
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