What is the real rate of return for machine

Assignment Help Financial Management

Reference no: EM132032060

"A corporation is considering purchasing a vertical drill machine. The machine will cost $66,000 and will have a 2-year service life. The selling price of the machine at the end of 2 years is expected to be $43,000 in today's dollars. The machine will generate annual revenues of $62,000 (today's dollars), but the company expects to have annual expenses (excluding depreciation) of $12000 (today's dollars). The asset is classified as a 7-year MACRS property. The tax rate for the firm is 44%. The general inflation rate is 4% 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: EM132032060

Questions Cloud

Calculate the net cost of insurance : Using time value of money and assuming you could invest your money elsewhere at an annual yield of 6 percent, calculate the net cost of insurance.

Evaluate how you will use information to support your ideas : A literature review aims to give you the opportunity to review, analyze, critique, and discuss various texts that relate to your topic.

What is brigitte basis in her newco shares : The property is subjuect to an $8,000 mortgage. Brigitte receives 700 shares and contributes $7,000 cash. What is Brigitte's basis in her 700 NewCo shares

What should be your need for life insurance : Your spouse expects to continue to work after your death. Using the DINK method, what should be your need for life insurance?

What is the real 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?

Prepare entries that vincent should record for the purchase : Vincent Company paid within the discount period. Prepare entries that Vincent should record for (a) the purchase and (b) the cash payment

What is the standard deviation of the returns on portfolio : what is the standard deviation of the returns on a portfolio that is invested 35 percent in both Stocks A and C, and 30 percent in Stock B?

Record the transactions in summerborn general journal : Summerborn Manufacturing, Co., completed the following transactions during 2012: Record the transactions in Summerborn's general journal

Identify home depot long-term liabilities : Identify Home Depot's long-term liabilities and the amounts for those liabilities from Home Depot's balance sheet at January 31, 2012

User Account

All Pages