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This is a sample question so I have the answer but I need to know the method of getting to the answer. I am not getting to the correct number. Please give detailed very simplified explanation using a financial calculator, calculator or Excel spreadsheet so that I understand how to do this please.
Your company is considering the replacement of an old delivery van with a new one that is more efficient. The old van cost $30,000 when purchased 5 years ago and is being depreciated using the simplified straight line method over a useful life of 10 years. The old van could be sold for $5,000 today. The new van has an invoice price of $75,000 and will cost an additional $5,000 to modify it to carry the company's products. Cost savings from the use of the new van are expected to be $22,000 per year for 5 years at which time the van will be sold for its estimated salvage value of $15,000. The new van will be depreciated using the simplified straight line method over its 5 year useful life. The company's tax rate is 35%/ Working capital is expected to increase by $3,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the tax effect of selling the old machine?
What minimum amount of annual cash inflow do you need if your firm has an 8% cost of capital? If the project is forecast to earn $12,500 per year over the 5 years, what is its IRR? Is the project acceptable?
Lee purchased a stock one year ago for $28. The stock is now worth $30, and the total return to Lee for owning the stock was 0.40. What is the dollar amount of dividends that he received for owning the stock during the year?
You are considering buying some stock in Continental Grain. Which of the following are examples of non-diversifiable risks?
Assume you own stock in a corporation. The current price is $25. Another corporation has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock.
Please show steps on how to calculate answer with a financial calculator.
Explain Capital Budgeting decision based on NPV of the project and the cost of aerators is expected to increase at 4 percent per year far into the foreseeable future
The interest is payable semiannually on July 1 and January 1. On July 1, 20X6, the hospital called all of the bonds and retired them. Required: What was the gain (loss) on this early extinguishment of debt.
Carol Jenkins, a lottery winner, will receive the following payments over the next seven years. If she can invest her cash flows in a fund that will earn 10.3 percent annually, what is the present value of her winnings? (Round answer to 2 decimal ..
Spencer Company sells 10 percent bonds having a maturity value of $300,000,000 for $2,783,724. The bonds are dated January 1, 2012, and mature January 1, 2017.
What is the difference in the projected ROEs between the restricted and relaxed policies?
The investor expects to receive $1.5 in dividend a year and $26 from the sales of the stock at the end of year 2. If the investor wants a 15% return (compound annually), what is the maximum price the investor should pay for the stock today? Show y..
Prepare a financial forecast for Joan Roberts.
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