Fixed asset is fully depreciated over life of the project

Assignment Help Financial Management
Reference no: EM131060507

A five-year project has an initial fixed asset investment of $290,000, an initial NWC investment of $26,000, and an annual OCF of −$25,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project’s equivalent annual cost, or EAC? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131060507

Questions Cloud

Health care experience : Research health care technology articles and choose one that is of interest to you or applicable to the area you are working in. Write a 700- to 1,050-word article review in which you address the following:
Read the post graduation adventure case : Josh and Mike met each other as roommates during freshmen year at MacAlister College in St. Paul, Minnesota. Despite a rocky start they became best friends. They are planning on going on a two week adventure together to celebrate their graduation ..
Period for the illness affecting eleven blue men : 1. Draw a timeline marking the time each of the 11 blue men presented symptoms. Explain the point of mapping out the incident timeframe (i.e. why would epidemiologists need this information and how would it be used) 2. Describe the key symptoms an..
Explain the role of computers in production : Explain the role of computers in production and operations management
Fixed asset is fully depreciated over life of the project : A five-year project has an initial fixed asset investment of $290,000, an initial NWC investment of $26,000, and an annual OCF of −$25,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
What is its p-e ratio : A company has an EPS of $2.40, a book value per share of $22.56, and a market/book ratio of 2.5x. What is its P/E ratio? The stock price should be rounded to the nearest cent. Round your answer to two decimal places.
What is the normality of the solution : What is the normality of the solution?
Economic evaluation of malnutrition : Graphically present economic consequences and economic evaluation of malnutrition
Effect on divisional partner motivation : (a) Discuss the present budgeting system and its likely effect on divisional partner motivation. (b) Explain two non-financial performance indicators (other than client satisfaction and service quality) that could be used by the firm.

Reviews

Write a Review

Financial Management Questions & Answers

  More on ratio analysis-use return on equity

Analysts and investors often use return on equity (ROE) to compare profitability of a company with other firms in the industry. ROE is considered a very important measure, and managers strive to make the company’s ROE numbers look good. Based on your..

  Difference between current yield and yield to maturity

Bob owns a 8% bond that is currently selling for $750. What is the current yield? Mary owns a bond that sells for its par value and has a semiannual interest payment of $35. Calculate the bond’s current yield and yield to maturity. What is the differ..

  Evaluation of an active portfolio management strategy

How is the Sharpe measure different from the Treynor measures of portfolio performance evaluation? What is the problem with using the Sharpe measure for evaluation of an active portfolio management strategy?

  Someone in a heavier tax bracket

Someone in a heavier tax bracket, but paying the same interest rate as someone else, might be better off as the after tax rate could/would be lower. Can you think of a circumstance this might happen in? Perhaps an industry which this is more likely t..

  Considering the purchase of a machine with capital budget

Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a machine with the following capital budget: Initial Investment $62,000 RATFCF Year 1 $22,000 RATFCF Year 2 $30,000 RATFCF Year 3 $38,000 What is the machin..

  Discuss the various types of healthcare financing options

Therefore, discuss the various types of healthcare financing options for the for-profit and not-for-profit healthcare organizations. Next, add-in the advantages/disadvantages for each, but first from the investor's perspective, and then from the issu..

  What is the present value of the annuity

What is the present value of the following annuity? $3346 every half year at the end of the period for the next 15 years, discounted back to the present at 19.78 percent, per year, compounded SEMIANNUALLY.

  Determined the common stock

Determined the common stock for Bertinelli Corp. based on the following information: cash = $260,000; patents and copyrights = $620,000; accounts payable = $440,000; accounts receivable = $179,000; tangible net fixed assets = $4,300,000; inventory = ..

  What is the effective annual interest rate

You have two options of paying for your new dishwasher, you can either make a single payment of $400 today, or you can pay $70 for the next 6 months, with the first payment made today. what is the effective annual interest rate (EAIR) of the second o..

  What is the net borrowing cost to illinois for the bab

Consider a BAB (Build America Bond) issued by the State of Illinois. This bond was issued on July 1, 2010. It was a 25-year bond at issue, had an A credit rating from S&P, and was issued at a yield (interest rate) of 7.1%. What is the net borrowing c..

  Structure of interest rates becomes inverted

Assume the term structure of interest rates becomes inverted?, with short-term rates going to 14 percent and long-term rates 6 percentage points lower than short-term rates. Earnings before interest and taxes are $1,010,000. The tax rate is 30 percen..

  Depreciation tax shield

Fill in the missing numbers for the following income statement. (Input all amounts as positive values. Do not round intermediate calculations.) Sales $ 676,900 Costs 431,800 Depreciation 104,400 EBIT $ Taxes (35%) Net income $ Calculate the OCF. OCF ..

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