Reference no: EM132951415
You must evaluate a proposal to buy a new milling machine. The base price is $111,000, and shipping and installation costs would add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $49,950. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $8,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $54,000 per year. The marginal tax rate is 35%, and the WACC is 10%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine.
- What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow?
-What are the project's annual cash flows during Years 1, 2, and 3? Do not round intermediate calculations.
-Should the machine be purchased? (Yes or No)
|
How to adjust entries into account
: How to adjust entries into account and Explain delayed asset with instance - This is a staple characteristic of notes issued at a discount
|
|
Determine the yield to maturity
: The 10?-year ?$1,000 par bonds of Vail Inc. pay 8 percent interest. The? market's required yield to maturity on a? comparable-risk bond is 5 percent.
|
|
Calculate the call price today
: 1. Consider a one-year European stock call option. The current stock price is Sh. 100 and the exercise price is Sh. 102. The risk-free rate is 5% and the size o
|
|
Yield to maturity on bond-saleemi? corporation
: The Saleemi? Corporation's ?$1,000 bonds pay 11 percent interest annually and have 14 years until maturity. You can purchase the bond for ?$955.
|
|
What is the year 0 project cash flow
: You must evaluate a proposal to buy a new milling machine. The base price is $111,000, and shipping and installation costs would add another $8,000. The machine
|
|
What would be the amount of loss
: What would be the amount of loss (profit) per unit if Garner sells to Cheap at $700 per unit and What is the amount of loss (profit) per unit
|
|
Compute the? bond yield to maturity
: The 14?-year, ?$1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market price of the bond is ?$865?, and the? market's required yie
|
|
Discuss the limitations and challenges of capm
: -Have you done any stock investments? Which stocks would you pick for your long-term investment, which ones for your short-term investment, and why?
|
|
Explain the average beta of the new stocks
: What must the average beta of the new stocks be to achieve the target required rate of return? Do not round your intermediate calculations.
|