Appropriate discount rate and corporate tax rate

Assignment Help Financial Management
Reference no: EM13724193

Scott Investors, Inc. is considering the purchase of a $360,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $60,000 in five years. The computer will replace five office employees whose combined annual salaries are $105,000. The market will also immediately lower the firm's require net working capital by $80,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 34%. The appropriate discount rate is 12%.

CALCULATE THE NPV OF THIS PROJECT. (Please show work)

Reference no: EM13724193

Questions Cloud

Implementing an innovative technology internally : 1. What factors must be considered when implementing an innovative technology internally? What factors must be considered when implementing an externally acquired innovative techology? How do the implementaion issues differ? How are they the s..
Performance incentive awards program : Design and support your program knowing that it must seem fair and equitable to all employees and should provide proper motivation to achieve organizational goals. Also indicate what rewards will be given for what specific performance outcomes.
What are three potential problems that could occur : The company that services your office eqiupment has hired a new salesperson. This person does not wear a wedding ring and is flirts with you. If you go out on a date with this person, what are three potential problems that could occur (work-r..
What is the marketing mix variable : Hewlett-Packard sells personal computers through specialty computer stores, electronics superstores, and its own Internet site. What is the marketing mix variable that is being considered here
Appropriate discount rate and corporate tax rate : Scott Investors, Inc. is considering the purchase of a $360,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $60,000 in f..
Center for creative leadership : A 2007 research report produced by the Center for Creative Leadership on The Changing Nature of Leadership concluded that the definition of effective leadership had changed in the last five years and some interesting trends in leadership were begi..
Basic concepts of circuit switching : Question 1: What are the basic concepts of circuit switching? Question 2: What are the advantages and disadvantages of circuit switching?
What effect did reconstruction have on blacks : What effect did Reconstruction have on blacks? Were they better off after Reconstruction than they were before the Civil War? What made Native American peoples vulnerable to conquest by European adventurers?
Discuss the most effective way to implement policies : One of the biggest risks that companies face is advanced persistent threats. Discuss the most effective way to implement policies that mitigate the chance of an insider either taking part in or facilitating an advanced persistent threat. Integ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the price of the bond

A bond has a coupon rate of 9.8 percent and 11 years until maturity. If the yield to maturity is 8.2 percent, what is the price of the bond?

  Determine that upon retirement

Jack and Jill determine that upon retirement, they will need to withdraw $70,000 annually at the end of each year for the next thirty years. They know that they can earn 4% each year on their investment. How much will Jack and Jill need in their reti..

  What is the certainty equivalent wealth

Describe the axioms of utility, what is the expected utility of wealth from taking the gamble and what is the Certainty Equivalent Wealth?

  How much will she save per month for remainder of loan life

Two years ago Abilia purchased a $13,000 car; she paid $2,500 down and borrowed the rest. She took a fixed rate 60-month instalment loan at a stated rate of 7.0% per year. Interest rates have fallen during the last two years and she can refinance her..

  Explain the efficient market hypothesis

The New York Stock Exchange is an example of a stock exchange that has a physical location. e) A larger bid-ask spread means that the dealer will realize a lower profit. f) The efficient market hypothesis assumes that all inventories are rational.

  What is the cost of common equity

Summerdahl Resorts' common stock is currently trading at $32.00 per share. The stock is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75), and the dividend is expected to grow at a constant rate of 6% a year. What is the..

  How does dividend payment affect stock price

What are advantages and disadvantages of stock repurchases relative to traditional dividend payments and how does dividend payment affect stock price? any supporting evidence?

  What is the expected rate of return

A company’s preferred stock is issued it $25 with promised evidence of 3% of four. Current price of the stock is $61. What is the expected rate of return?

  Question 11using the diagram belowlsquobuilding blocks of

question 11.using the diagram belowlsquobuilding blocks of financial management explain the three most important

  Which of the following is a reason why an expertise in

1 which of the following is a reason why an expertise in international finance is important?a because the process of

  What does the term independent director mean

what does the term 'independent director' mean and should specific board positions be held by independent directors (eg Chairman). If so, why? If not, why not?

  What is the monthly mortgage payment

Suppose you are buying your first house for $400,000 with 20% down payment. You have arranged to finance the remaining amount with a 30-year, monthly payment, amortized mortgage at nominal annual rate of 3.6%. What is the monthly mortgage payment?

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