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Rocky Mountain Lumber Company is considering purchasing a new wood saw that costs $50,000. The saw will generate revenues of $100,000 per year for four years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. Depreciation expense will be $12,500 per year over the four years. The machine is expected to sell for $950 after-taxes at the end of its four-year life. Rocky Mountain’s tax rate is 34 percent, and its opportunity cost of capital is 10 percent. What is the NPV of this investment?
Calculating deposit needed. You put 10000 in an acct earning 5% . After 3 yrs you make another deposit into the same acct. seven yrs later ( that is 10 years after original 10000 deposit) the acct balance is 21000. What was the Amt. of the deposit at..
The initial cost of a solar energy system is $14,000. If this amount is paid with a 30% down payment and the balance is borrowed at 8% interest for 12 years, calculate the annual payments [A] and interest charges [B] for a market discount rate of 6%...
case analyses select two court cases from different chapters from the list below and respond in writing to the case
Kim Lee is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now Kim is living at home and works in a shoe store, earning a gross income of $1770 per month. Her employer deducts a total of $150 for ..
Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,300,000. Also, at year-end 2015, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..
You can lease a car for $7,500 per year for 6 years. Or, you can purchase the car for $45,000 in cash today. If the cost of funds [what you can earn on your money] is 2.63%, is it cheaper to lease or purchase the car?
A firm has 500,000 shares of stock outstanding with a par value of $1 per share and debt outstanding with a par value of $1,000,000. The stock is selling for $10 per share, and the debt is selling at a discount (90% of par). If the firm were financed..
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: If the required return is 15 percent, what is the IRR for this project?
The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $11 million but realizes after-tax inflows of $5 million per year for 4 yea..
An electrical energy audit indicates that the motor control center consumption is 8´106 kWh per year. By using high efficiency motors, a savings of 15% can be achieved. The additional cost for these motors is about $80,000. Assuming that the average ..
Frye Inc. is considering raising the new capital through issuing convertible bonds which will be sold at par, carry a coupon rate of 6% - annually paid, have 20-year maturity, and can be converted into 23 shares of stock. The bonds would be non calla..
Given the following parameters use put-call parity to determine the price of a put option with the same exercise price.
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