### Problem regarding the before-tax operating costs

Assignment Help Finance Basics
##### Reference no: EM131005296

You have been asked by the CEO of the ENI Construction Company to evaluate the proposed acquisition of a new earth mover. The mover"s basic price is \$50,000, and it would cost another \$10,000 to modify it for special use in the newly awarded contract site. Assume that the mover falls into the MACRS 3-year class i.e, 33% 45% and 15% depreciation slabs apply in year 1, 2, and 3 respectively it would be sold after 3 years for \$20,000, and it would require an increase in net working capital (spare parts inventory) of \$2,000. The earth mover would have no effect on revenues, but it is expected to save the firm \$20,000 per year in before-tax operating costs, mainly labor. The firm"s marginal tax rate is 40 percent.

#### Period of growing competition

The industry of mobile phones is experiencing a period of growing competition that erodes the profit margin and that is killing many competitors. In the last five years the

#### Determine the costs of preference shares

Flotation costs are expected to be 5 per cent; these costs can be amortized for tax purpose during 8 years at a uniform rate. The corporate tax rate is 35 per cent. Determin

#### Units of a tools component

Master Tools Ltd. Is currently operating its business at 75% level, producing 38275 units of a tools component and proposes to increase capacity utilization in the coming ye

#### Expected return on the market

The Covariance between these two stocks is -.001. The expected return on the market is .15 with a standard deviation of .15. The risk free rate is .03. You can borrow and lend

#### Determining the marginal corporate tax

Now assume ABC and XYZ each pay a 20% marginal corporate tax, and Richard pays a 15% tax on dividends. Repeat a) and b). How is the outcome different than in a), b), and c)?

#### Shares of stock at the current stock price

Looking forward to next year, if Digby's current cash balance is \$19,378 (000) and cash flows from operations next period are unchanged from this period, and Digby takes ONL

#### Alternatives for outsourcing a service

1. Create a simple decision table that might be used to decide between three alternatives for outsourcing a service for a city government (You will have to fabricate amounts

#### Careers in finance

Finance is an exciting field in need of intelligent, skilled people. The job opportunities range from corporate finance, financial planning, investment banking, insurance, a