Find the minimum earnings, Financial Management

Assignment Help:

Milan Corporation is interested in buying a machine that will cost $50,000, and it will depreciate it on straight-line basis over a 5-year period. The machine is expected to last for 7 years and then Milan will sell it for $5,000. The expected earnings before taxes from the machine is $15,000 with a standard deviation of $5,000. The income tax rate of Milan is 35%, and it uses 10% as discount rate.

(A) Find the minimum earnings before taxes that this machine should generate annually to justify its purchase.

(B) Find the probability that this machine will be profitable.


Related Discussions:- Find the minimum earnings

Estimate the most systematic risk, Yang Su is considering the following inf...

Yang Su is considering the following information on two stocks:                                                                              Rate of Return State of Economy

Report on bank''s predicts of exchange rates, Q. Report on bank's predicts ...

Q. Report on bank's predicts of exchange rates? Report on banks' predicts of exchange rates. The three banks have produced extensively differing forecasts which even involve

Determine the factors which common stockholders consider, What are some of ...

What are some of the factors which common stockholders consider while deciding how much, if any, cash dividends they desire from the corporation in which they have invested? Comm

Leverage, What are the importance of leverage on a small scale firm?

What are the importance of leverage on a small scale firm?

Definition of budgetary control, DEFINITION OF BUDGETARY CONTROL As pe...

DEFINITION OF BUDGETARY CONTROL As per the ICMA, BUDGETARY CONTROL is the establishment of budgets, relating the tasks of executives to the requirements of a policy, and the c

Deefine market price of a bond be influenced, If all other things held cons...

If all other things held constant, how would the market price of a bond be influenced if coupon interest payments were made semiannually in place of annually? Several bonds iss

Commercial paper, Commercial Paper (CP) is a short-term unsecured pro...

Commercial Paper (CP) is a short-term unsecured promissory note issued in the open market. It also represents the obligation of the issuer. Normally, it is issued

Explain the political risk related with making fdi, What factors would you ...

What factors would you consider in evaluating the political risk related with making FDI in a foreign country? Answer: Factors to be considered as follow: a) The host countr

Operating cycle, application of the operating cycle to a vegetable company

application of the operating cycle to a vegetable company

Write Your Message!

Captcha
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