What level of pretax cost savings do we require

Assignment Help Finance Basics
Reference no: EM133123706

A proposed cost-saving device has an installed cost of $695,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $105,000, the marginal tax rate is 25 percent, and the project discount rate is 11 percent. The device has an estimated Year 5 salvage value of $80,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM133123706

Questions Cloud

What is the firm wacc and total corporate value : If it increases leverage, rs will be 16%. If it decreases leverage, rs will be 13%. What is the firm's WACC and total corporate value
What is the annual inflation rate : What is the annual inflation rate? Provide your answer expressed in percentages and rounded to to the closes integer -- e.g., 12% or 34%.
Identify the potential positive and negative effects : Your company has chosen to implement new application for general use by health care providers.Identify potential positive and negative effects to your solution.
Why is diversification is a protection against ignorance : Warren Buffett (Trades, Portfolio) has famously said he is against diversification why he said that, and why is Diversification is a protection against ignoranc
What level of pretax cost savings do we require : A proposed cost-saving device has an installed cost of $695,000. The device will be used in a five-year project but is classified as three-year MACRS property f
What would be your total real return on the investment : If the inflation rate was 4.4 percent over the past year, what would be your total real return on the investment
Considering purchasing stock : If you were an investor considering purchasing stock in either Nike or Under Armour, which company would you choose?
What is the value of a share of stock : PQR stock has a sustainable growth rate of 3.58 percent, ROE of 13 percent, and dividends per share of $2.35. If the P/E ratio, based on trailing earnings, is 2
Determine lajolla securities profit on the offering : Required - LaJolla Securities' expenses associated with the offering were $500,000. Determine LaJolla Securities' profit on the offering

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the par value of the issued common shares

Alex is considering reissuing the 5,000 treasury shares at the present market price of $10 per share. What effect would this action have on the company's debt/equity ratio, book value per outstanding share, and earnings-per-share ratio?

  Issue perpetual preferred stock at a price

1. Columbus Veterinary Supplies can issue perpetual preferred stock at a price of $90 a share. The issue is expected to pay a constant annual dividend of $5.85 a share. Ignoring flotation costs, what is the company's cost of preferred stock,rps? E..

  What is the cost of capital?

What is the cost of capital?

  Old personal loan officer at second national bank

1.Jacqueline Strauss, a 25-year-old personal loan officer at Second National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $3,000 per year for her retirement fund and assumes that she'll ..

  What are a few of the weaknesses of the payback method

Explain the difference between fixed cost and variable costs. What are a few of the weaknesses of the payback method?

  What role does uncertainty play

How would the recognition, policy, and impact lags differ with regard to monetary and fiscal policy?- What role does uncertainty play?

  Standard deviation on stock i expected return

The standard deviation on Stock I's expected return is _____ percent, and the Stock I beta is ____ . The standard deviation on Stock II's expected return

  Holdup bank has an issue of preferred stock with a 6 stated

holdup bank has an issue of preferred stock with a 6 stated dividend that just sold for 96 per share. what is the banks

  Introduction to the concept of short-selling

Devise a trading strategy that, based on the information above, would allow you to lock in a riskless pro?t. Explain in what sense the strategy is riskless.

  What is the company wacc

Game of Thrones Corporation has a target capital structure of 50% common stock, 10% preferred stock, and 40% debt.

  What is weighted average cost of capital for the company

The company is in the 40% tax bracket. What is the weighted average cost of capital (WACC) for the company?

  Commute distance for all california commuters

An investigator claims, with 95 percent confidence, that the interval between 10 and 16 miles includes the mean commute distance for all California commuters. To have 95 percent confidence signifies that:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd