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XYZ Corporation is considering an expansion project. To date they have spent $65,000 investigating the viability of the project and have decided to proceed. The CEO of XYZ spent $20,000 last year on his business trip to New York where he discussed about the proposed new project with the board members. The company spent $50,000 on a marketing study before its current analysis regarding whether to accept or reject the project. The proposed project will cost $550,000. The project will be depreciated over a 3 year MACRS class life. XYX would use the 3-year MACRS method to depreciate the machine and equipment which are 33% 45%, 15% and 7%.
If the project is undertaken the company will need to increase its inventories by $45,000, and its accounts payable will rise by $10,000. The company will realize an additional $750,000 in sales over each of the next four years. The company's operating costs (not including depreciation) will increase by $540,000 a year. Both sales and the operating cost are expected to grow 4.5% annually during the life of the project. The company's tax rate is 35%. At t = 3, the project's economic life is complete, but it will have a salvage value (before-tax) of $55,000 after three years. The project's WACC is 10.5%. What is the project's net present value (NPV)? What is the IRR? Should the project be accepted? Why or why not?
Kermit's Hardware's fixed operating costs are $20.8 million and its variable cost ratio is 0.30. The firm has $10 million in bonds outstanding with a coupon interest rate of 9 percent.
Whole Foods has a $708,163 bond issue outstanding with a coupon rate of 0.07 and a yield to maturity of 0.107. What is the present value of the tax shield if the tax rate is 0.53?
Please compare and contrast acquisition indebtedness and home-equity indebtedness. Why might it be good advice from a tax perspective to think hard before deciding to quickly pay down mortgage debt?
Pluralism, state autonomy, and elitism are three theories of U.S. policy making. Pluralism focuses on power of individuals, state autonomy on bureaucracies, and elitism on effect of elites in society.
A credit union offers a savings account with the interest rate of 10 percent compounded daily. Calculate the effective interest rate if you use 360-day year?
Computation of Depreciation expense and What is Laiho's depreciation expense but no amortization expense
Year forecast of estimated future cash flows
American Steel and Rubber feels that a lockbox system can shorten its accounts receivable collection period through two days. Credit sales are $3,000,000 per year, billed on a continuous basis.
A stock has a beta of 1.20 and an expected return of 14 percent. A risk-free asset currently earns 3.0 percent. Calculate the expected return on a portfolio that is equally invested in the two assets?
The growth rate for McDonalds is expected to be 10 percent for one year. After that, the dividend rate is expected to grow at a rate of 6 percent indefinitely.
The ledger of Salizer Company at the end of current year shows Accounts Receivable 110,000 , Sales 840,000, and sales Returns and Allowances 40,000.
Quantum and Aquafin Products. Senior managers at Quantum Products are evaluated in terms of rise in profit.
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