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Briar Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $219,000. The equipment will have an initial cost of $1,219,000 and have an 8 year life. The salvage value of the equipment is estimated to be $219,000. The hurdle rate is 8%. Ignore income taxes. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.) a. What is the accounting rate of return? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) b. What is the payback period? (Round your answer to the nearest whole number.) c. What is the net present value? (Round your answer to nearest dollar amount.) d. What would the net present value be with a 13% hurdle rate? (Negative value should be indicated by a minus sign. Round your answer to nearest dollar amount.) e. Based on the NPV calculations, in what range would the equipment’s internal rate of return fall? (Round your answer to 2 decimal places.)
Company Oakland has 100 shares of common stock outstanding. Its current stock price is $10 per share. Its current book value is $800 and total debt is $400. The company has $300 of excess cash. If the company uses the excess cash to buy back its shar..
Assume that a speculator purchases a call option on British pounds (with a strike price of $1.50) for $.05 per unit.
Calculate the expected net present value of this project in the absence of the abandonment option.
Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate o..
A developer puts in 5% equity and a fund puts in 95% of the equity for a development deal. Cash flow is to be distributed with the following order of priorities (e.g., "the waterfall"): At the end of the first full calendar year the project is sold f..
The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse.- calculate the net investment for the new line.
Should the existing building be demolished if there are no demolition costs? Should the existing building be demolished if demolitioon costs are $10,000.
Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $57,000, has a 3-year life and will be worthless after the 3 years. The pre-tax cost of borrowed funds is 8 percent and..
Cooley Landscaping Company needs to borrow ?$25 comma 000 for a new? front-end dirt loader. The bank is willing to loan the funds at 7.5 ?% interest with annual payments at the end of the year for the next 10 years. What is the annual payment on this..
What is the total cost forecast for a volume of 50,000 patient days?
A series of quarterly cash flows began with the first cash flow on April 1,1990 and ends with the last cash flow on January 1,2000. The first quarterly cash flow is equal to $24,000. Each successive cash flow increases $850. Determine the amount of e..
A single 5-year zero-coupon debt issue with a maturity value of $120 and the expected return on assets of 12%. the expected return on equity, the volatility of equity
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