Reference no: EM131025522
A farmer expects irrigation system will increase real operating receipts by $22,000 per year but will also increase real operating expenses by $5,000. Suppose that the inflation rate is 3% and the marginal tax rate is 15%.
(i) What is the nominal net return at the end of year 2?
a. $16,490 b. $18,035
c. $17,000 d. $19,550
(ii) Calculate the nominal after-tax net return at the end of year 5.
a. $19,708 b. $19,550
c. $18,963 d. $16,752
Given the following information :
Nominal Initial Cost = $90,500; Nominal Before-tax Net Return = $7,000
Marginal Tax Rate = 20%; Required rate of return = 11%
Real Terminal Value = $110,500; Investment Life = 5 years
Suppose that IRS will allow the investor to depreciate the investment using straight-line over 12 years and the inflation rate is 5%.
(i) What is the annual depreciation expense?
a. $7,452 b. $7,919
c. $8,100 d. $7,905
(ii) What are the tax savings from depreciation?
a. $819.72 b. $1,490.40
c. $372.60 d. $1,400.00
|
Calculate consumer surplus and the dead-weight loss
: Draw the Supply and the Demand curves and find the equilibrium price and quantity. Calculate consumer surplus, producer surplus, and the dead-weight loss. Name three changes that would cause the demand curve to shift in this market
|
|
Fixed costs increase before accounting profits turn negative
: A project currently generates sales of $10 million, variable costs equal to 50% of sales, and fixed costs of $2.1 million. The firm’s tax rate is 40%. The project will last for 10 years. The discount rate is 11%. What is the effect on project NPV, if..
|
|
What recent evidence about the performance of medical homes
: What recent evidence about the performance of medical homes can you find? What recent evidence about bundled payment programs can you find? What recent evidence about Medicare Advantage HMOs can you find? What recent evidence about the performance of..
|
|
Gross revenue and net revenue patient service revenue
: In a minimum of 300 words, respond to the following: Select two different types of HCOs and comment on the most positive and most negative effects of using the cash versus accrual accounting method for the business. Compare and contrast the following..
|
|
Calculate the nominal after-tax net return at end of year
: A farmer expects irrigation system will increase real operating receipts by $22,000 per year but will also increase real operating expenses by $5,000. Suppose that the inflation rate is 3% and the marginal tax rate is 15%. Calculate the nominal after..
|
|
Firm is considering issuing bond to raise capital project
: A firm is considering issuing bonds to raise capital for a project. The leaders at the firm are trying to figure out how much the markets will buy their bonds for (market value). They have the following information: Draw the Cash flow diagram. What i..
|
|
What are variable and fixed costs of hamburger production
: In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $3.4 million. In a good year, it can produce 4.8 million hamburgers at a total cost of $4.6 million. What are the variable and fixed costs of hamburger production..
|
|
Pricing stock issues-what is a fair price per share
: Benjamin Garcia's start-up business is succeeding, but he needs $206,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $824,000 and the angel has agreed to invest the $206,000 that is neede..
|
|
Abandon change the firms decision to accept the project
: Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 60,000 units a year at a price of $50 each. The firm will make the decision to continue or abandon after the fi..
|