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New-Project Analysis The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm’s R&D department. The equipment's basic price is $100,000, and it would cost another $25,000 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year class, would be sold after 3 years for $35,000. The MACRS rates for the first 3 years are 0.3333, 0.4445 and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $4,000. The machine would have no effect on revenues, but it is expected to save the firm $40,000 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 35%. What is the Year 0 net cash flow? If the answer is negative, use minus sign. $ What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar. Year 1 $ Year 2 $ Year 3 $ What is the additional (nonoperating) cash flow in Year 3? Do not round intermediate calculations. Round your answer to the nearest dollar. $ If the project's cost of capital is 12%, should the chromatograph be purchased?
Susana takes out a $1000 loan (constant amortization loan). What is the annual payment in year 3?
Is a smelter vulnerable to sovereign interference in mozal project? Is this smelter vulnerable? How have the sponsors tried to mitigate sovereign risk?
What is the breakeven point in units? In dollars? What is the contribution margin in percent? In dollars?
Suppose you purchase five put contracts on Testaburger Co. The strike price is $54, and the premium is $3. If, at expiration, the stock is selling for $47 per share, what are your put options worth? What is your net profit?
Tempe is considering four mutually exclusive public-works projects. Their costs and benefits are presented in the table below. Each project has a useful life of 50 years and the MARR is 12% per year. Which of the projects, if any, should be selected?..
The composition of the Dominion Fund portfolio is as follows: STOCK SHARES PRICE A 200,000 $31 B 300,000 $46 C 400,000 $14 D 600,000 $23 Assume that during the year the portfolio manager sells all of the holdings of Stock D and replaces it with 200,0..
Currently a stock is trading at $25/share. A three-month European call option with a strike price of $25 is valued at $1.3214. Assume that the risk-free rate is 2.5% and that the standard deviation of stock returns is 25%. What is the price of a Euro..
How much will an employee’s portfolio be worth after working for the company 30 years more?
What is the value of a 1-year put option on Humboldt with an exercise price of $60?
Stock A has an expected return of 13 percent and a 25 percent volatility. Stock B has an expected return of 9 percent and a 30 percent volatility. An investor can only purchase one of the two stocks. The investor bought stock A. What is her attitude ..
Calculate Usher Sports Shop’s cash flow from operations for 2015.
What is the NPV associated with the transaction?
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