What is the real inflation-free rate of return for machine

Assignment Help Financial Management

Reference no: EM132056002

"A corporation is considering purchasing a vertical drill machine. The machine will cost $58,000 and will have a 2-year service life. The selling price of the machine at the end of 2 years is expected to be $40,000 in today's dollars. The machine will generate annual revenues of $45,000 (today's dollars), but the company expects to have annual expenses (excluding depreciation) of $6600 (today's dollars). The asset is classified as a 7-year MACRS property. The tax rate for the firm is 34%. The general inflation rate is 6% and will impact the annual revenue, annual expenses, and salvage value. What is the real (inflation-free) rate of return for this machine? Express your answer as a percentage between 0 and 100."

Reference no: EM132056002

Questions Cloud

The daily cash flows for the pele bicycle shop : The variance of the daily cash flows for the Pele Bicycle Shop is $890,000. The fixed cost of buying and selling securities is $300 per transaction.

Associated with buying and selling marketable securities : Slap Shot Corporation has a fixed cost associated with buying and selling marketable securities of $40.

What is the net present value of these cash flows : If ABC's inflation-free MARR is 12% and the general inflation rate is 2.9%, what is the net present value of these 11 cash flows?"

What is the net cash flow in year five in actual dollars : If the inflation rate is 6%, what is the net cash flow in year 5 in actual dollars? Assume there are no investments or salvage values in this year.

What is the real inflation-free rate of return for machine : A corporation is considering purchasing a vertical drill machine. What is the real (inflation-free) rate of return for this machine?

Determine the INFLATION-FREE IRR of the computer system : A firm is considering purchasing a computer system. -Cost of system is $199,000. determine the INFLATION-FREE IRR' of the computer system.

Mini-doughnut machine maker quoted price for custom : A manufacturing company of a mini-doughnut machine maker quoted a price for a custom-designed doughnut machine to be delivered in 2017.

The INFLATION-FREE IRR of the computer system : Determine the INFLATION-FREE IRR' of the computer system. Enter your answer as a percentage between 0 and 100."

Principal payment should not be changed by inflation rate : The debt interest paid and principal payment SHOULD NOT be changed by inflation rate.

User Account

All Pages