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In addition to your regular job, for the last three years you have operated your own business as a crocodile wrestler, entertaining tourists at Brick Town. Assume that you paid $6,000 for the crocodile that you have been wrestling for the last 3 years. You can sell this crocodile for $4,000 today. You are depreciating your current crocodile straight line for 6 years to a salvage value of $0 at the end of 6 years. You are considering replacing your current crocodile with a special new model (natural teeth replaced with life-like rubber teeth) that will cost $12,000 and will be worthless at the end of 3 years. However, the combination of extra revenues (looks more ferocious) and costs savings (fewer medical bills), will provide increased before-tax cash flows of $6,000 per year. If you depreciate the new "Safety-Croc" model straight line for 3 years to a salvage value of zero and your required rate of return is 15%, should you replace your crocodile? Assume that you are in a 30% tax bracket. Calculate the NPV.
a. NPV = $3,344.45 IRR = 38.13%
Analysis of financial condition of a Company - Please analyze the financial condition of the company; under the following category: - profitability
Bavarian Sausage just issued a 10 year 7% coupon bond. The face value of the bond is $1,000 and the bond makes annual coupon payments. If the required return on the bond is 10%, what is the bond's price?
Calculate the total value of all shares outstanding currently and what fraction of the total value outstanding does each stock make up?
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For this problem, assume that a year consists of twelve 30-day months. Assuming that Eaton is able to raise the $250,000 it needs by stretching its accounts payable, determine the firms annual lost cash discounts
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The announcement on February 5, 2004, of the end of the wildly successful partnership between Walt Disney Company and Pixar Animation Studios rocked the investment and entertainment world.
Assign administrative overhead costs to the two product lines based on ABC, using the cost drivers designated in the data provided above. Determine the profitability of each product line (in dollars and percentages)
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