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1. A public transit authority is evaluating whether to purchase new high-speed railcars from Siemens AG or General Electric. The Siemens AG cars cost $275,000 each, are expected to last ten years and have anticipated annual maintenance costs of $10,000 each. The General Electric cars cost $195,000, are expected to last six years and have anticipated annual maintenance costs of $15,000 each. If the transit authority's cost of capital is 8%, and the cost is spread evenly over each year, which manufacturer should they chose? (Hint: Annualize the cost using the PMT function in Excel.) Does your conclusion change if General Electric guarantees that annual maintenance on their railcars will not exceed $10,000 each?
2. The code enforcement unit of a public safety department has two options for purchasing a new vehicle: a $23,000 four-cylinder sedan that averages 26 mpg or a $28,000 hybrid that averages 47 mpg. Assuming that gasoline will cost $4.00 per gallonthat the vehicle will be driven for 15,000 miles per year and will incur annual maintenance costs of $200, which vehicle should the unit purchase? Further assume the vehicle will be kept for five years with no salvage value and a discount rate of 5%. Does your recommendation change if the vehicle is kept for six years?
Explain the many ways transaction costs are problematic in financial markets. As part of your response give an actual example with a numerical breakdown that illustrates this problem.
At the end of the twenty years, how much less Magareit will have than Frederico?
Income - Extraordinary Income Accounting, Cash dividends, Stock splits, Cumulative dividends, Issue of Bonds, Bond types and Bond prices.
British Quince comes across an average-risk investment project that offers a rate of return of 9.5%. This is less than the company's normal rate of return, but one of Quince's directors notes that the company can easily borrow the required investment..
michaels inc. just paid 2.40 to its shareholders as the annual dividend. simultaneously the company announced that
future value. compute the future values of a an initial 2000 compounded annually for 10 years at 8 percent b an
Tom 3/1 ARM will be based on the LIBOR index which stands at 4.5% today. The interest rate caps for his loan are 2/1/6.
Suppose you want to purchase a new ski boat two years from now, and you plan to save $8,200 per year, starting one year from today. You will deposit your savings in an account that pays 6.2% interest.
Cordoba Plc has the selling value of £25 per unit, direct material cost of £10/unit, direct labour cost £6/unit and variable overheads of £4 per unit.
One year ago, you purchased a 5-year, $1,000 face value, 6 percent coupon bond for $1,012. Interest is paid semi-annually. Today, you sold the bond at a market rate of return of 6.27 percent. What is your total return in dollars on this investment..
According to the residual distribution model (assuming all payments are in the form of dividends), how large should Wei's dividend payout ratio be next year?
The firm now has the option of investing $20 million in developing a new seismic test which will increase the informativeness of the prospecting.
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