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Home Guard has recently completed a $100,000, two-year study on its new pest control device. It can go into production for an initial investment in equipment of $5 million. The equipment will be depreciated straight line over the useful life of 5 years to a value of zero. The fully depreciated equipment is expected to sell for $800,000 at the end of its useful life. The project also requires investment in land value of $300,000 which is expected to have a realisable value of $500,000 at the end of the project. Investment of $400,000 in current assets will be recovered at the termination of the project.
The marketing department has estimated that 200,000 units of its new device could be sold annually over the next five years at a price of $7 each. Fixed costs of $500,000 per annum will be incurred. The firm is an ongoing profitable business and pays taxes at a 30% rate in the year of income. All capital gains will also be taxed at a rate of 30%. The company uses a 10% discount rate on the new project. Using the NPV approach, advise the firm whether the project should be undertaken.
A 473-foot, 7000-ton World War II troop carrier (once commissioned as the USS Excambion) was sunk in the Gulf of Mexico to serve as an underwater habitat and diving destination. The project took 10 years of planning and cost $4 million. Assume the $4..
The Targeted Jobs Tax Credit (TJTC) existed from 1979 through 1994. It offered employers a tax credit for each “less-skilled” worker they employed. Assume that the tax credit was fixed at $5 per- hour-worked by a less-skilled worker.
Suppose demand and supply are given by Qd = 50 - P and Qs = 1.0P - 10. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $45 is imposed in this market Quantity demanded: Quantity supplied: Su..
The CEO has asked you to identify and provide a rationale for each of three cost-reduction strategies in the health care sector which can be implemented within the overall health care sector which would serve to help reverse this trend. He has reques..
As internet banking spreads, velocity begins to increase at a rate of 3 percent per year. What will happen to the rate of inflation? How could the ECB offset the impact on inflation.
Anyone help me with this problem in excel? 4. Technology Maturation. Green Futures operates a solar panel power generation facility in Florence, Alabama. Green futures sells electricity for $0.07 per kilowatt hour. When should the panels be upgraded?..
How does an increase in interest rates affect the present value of a future payment? How does an increase in the size of a future payment affect the present value of a future payment?
No one can predict a natural disaster or world crisis. When a hurricane or flood or a pandemic strikes a country, who is most likely to respond first? Which economic system is the best solution to handling a crisis of epic proportion?
What are lags in monetary policy? What causes inside and outside lags in monetary policy?
Two important facts of decision life are that different people value the same things in different ways, and that most business decisions have several bene?ciaries, not just one. Thus, if the deciders select one alternative, the outcomes will please s..
Assume that you have deposited some amount of money last year and the nominal interest rate was 10 percent. After one year, you learn that you have $1,595 in your account. How much money did you deposit initially?
Clearly explain the implication of the crowding-out effect on the link between government deficits, interest rates and inflation?
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