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Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs. System B costs $342,000, has a six-year life, and requires $70,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever project is chosen, it will not be replaced when it wears out. The tax rate is 35 percent and the discount rate is 10 percent.
Calculate the NPV for both conveyor belt systems
How do you think firms should go about predicting this growth rate so that they do not overestimate or underestimate their growth rate?
A project has an initial cost of $62,575, expected net cash inflows of $13,000 per year for 9 years, and a cost of capital of 13%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.
Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts. Calculate the equity capital ratio. Calculate the Tier 1 Ratio using risk-adjusted assets. Calculate the Total Capital (Tier 1 and Ti..
An investment project costs $16,800 and has annual cash flows of $3,500 for 6 years. If the discount rate is zero percent, the discounted payback period is _________ years. If the discount rate is 5 percent, the discounted payback period is _________..
Corp has total current assets of $11,690,000, current liabilities of $5,728,000 and a quick ratio of 0.85. What is its level of inventory?
Alabaster Incorporated wants to be levered at a debt to value ratio of .6. The cost of debt is 9%, the tax rate is 35%, and the cost of equity for an all equity firm is 12%. What will be Alabaster's cost of equity?
A firm has current liabilities of $500. Account receivables are $300 and inventory is $400. All other current assets equal $800. Long term assets are $5000, long term liabities are $2500, sales is $8000, EBIT is $2000, interest expenses are $600 and ..
A treasury bill with 64 days to maturity is quoted at 99.012. what is the bank discount yield, the bond equivalent yield and the effective annual return?
Do you agree or disagree with the following statement given the discussion in this chapter? We can calculate future cash flows precisely and obtain an exact value for the NPV of an investment
An example of diversifiable risk that a financial manager should ignore when analyzing a project's risk would include: Commodity price changes, Labor costs, Overall stock price fluctuations
A local government is about to run a lottery but does not want to be involved in the payoff if a winner picks an annuity payoff. The government contracts with a trust to pay the lump-sum payout to the trust and have the trust (probably a local ban..
Fijisawa inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. the initial outlay would be $2,010,000 and the project would generate cash flows of $460,000 per year for..
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