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An old machine have operated 10 years, but will continue operating for another 5 years. The cost of the machine was 30,000 with a residual value of 0. This machine could be sold in $12000 today but this offer depreciates $2400 per year. The anual operational cost are $5000, but each year increase for the amount of $1300. The cost of a new machine is $45000 with an estimated residual value of $5000 in the year 20th. The operational cost of the new machine is 3000 the first 10 years and 4000 the last ten years. The rate of return of capital is 12% and the contribution rate of 30%. Assume the depreciation is a constant deduction. a) Calculate the equivalent operational anual cost in the first year of the old machine. b) calculate the equivalent operational anual cost of the New machine during all its life(20 years).
Evaluate the company's weights of capital (debt, preferred stock and common stock) and estimate the company's before-tax and after-tax component cost of debt.
Of the capital budgeting techniques discussed, which works equally well with conventional and non-conventional cash flows and with independent and mutually exclusive project?
John bought 100 stock of Ford for $8 per share a year ago. Today he decides to sell the stocks for $16 per share. During this year, John also received $0.20 dividend per share. What is the dividend yield on Ford stock? Which of the following securiti..
Diane is interested in buying a five-year zero coupon bond with a face value is $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?
AllCity Inc is financed 40% with debt, 10% with preferred stock, and 50% with common stock. Its pretax cost of debt is 6%. Its preferred stock pays an annual dividend of $2.50 and is priced at $30. It has an equity beta of 1.1. Assume the risk-free r..
Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1.
At year-end 2013, Wallace Landscaping total assets were $1.1 million and its accounts payable were $305,000. Sales, which in 2013 were $2.9 million, are expected to increase by 30% in 2014. Total assets and accounts payable are proportional to sales,..
Suppose that 3 years ago you purchased from the government of Eldorado 5-year saving bonds at a yield to maturity of 4%. However, currently as two years remain to maturity, they are trading at a yield of 20%. Assuming that the interbank rate in Eldor..
Beam Inc. bonds are trading today for a price of $1287.99. the bond currently has 22 years until maturity and has a yield to maturity of 5.26%. The bond pays annual coupons and the next coupon is due in one year. What is the coupon rate of the bond?
Debt and Common Equity are only used in this company. It can borrow unlimited amounts at an interest rate of 10% as long as it finances at its target capital structure which calls fo 45%debt and 55% common equity. What is the company's expected growt..
Suppose Provo, Inc., had net income of $30 million for the most recent fiscal period.- what is its change in working capital for this most recent fiscal period?
T. Walcott Company(TWC) is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback, NPV, IRR, and MIRR?
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