Salvage value and maintenance cost

Assignment Help Financial Management
Reference no: EM131078064

Your firm's discount rate is 8%. Your are considering the purchase of truck A or truck B. Truck A cost $120, has a usefullife of three years, no salvage value and maintenance cost of $10.00 per year. Truck B cost $80.00 has a useful life of 2 years no salvage value and maintenance cost of $15.00 per year which truck should you choose select.

Reference no: EM131078064

Questions Cloud

Project under consideration has the cash flows : A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,000 1 11,000 2 14,000 3 10,000 What is the NPV for the project if the required return is 10 per..
Cash flow by hedging sales with the futures contracts : A farmer sells futures contracts at a price of $2.75 per bushel. The spot price of corn is $2.55 at contract expiration. The farmer harvested 12,500 bushels of corn and sold futures contracts on 10,000 bushels of corn. Ignoring the transaction costs,..
The liquidity premium theory holds : The current rate on a five-year Treasury is 6.44%. The current rate on a six-year Treasury is 7.01%. The liquidity premium in year 5 (L5) is 0.15% and the liquidity premium in year 6 (L6) is 0.25%. If the liquidity premium theory holds, what does the..
High-paying job as security analyst for hedge fund : You got a high-paying job as a security analyst for a hedge fund. Your employer wants your opinion about XWZ common stock which currently sells for $92.50 per share and which recently paid a dividend of $3.95 per share. In ten years dividends per sha..
Salvage value and maintenance cost : Your firm's discount rate is 8%. Your are considering the purchase of truck A or truck B. Truck A cost $120, has a usefullife of three years, no salvage value and maintenance cost of $10.00 per year. Truck B cost $80.00 has a useful life of 2 years n..
Two firms have the same asset beta and tax rate : Two firms have the same asset beta (Ba) and a tax rate but different equity Betas. The firm with the higher equity beta must employ more financial leverage.
What percentage of company capital structure consist of debt : Miller Von Enterprises' capital structure consists solely of debt and common equity. It can issue debt at rd = 10.6%, and its common stock currently pays a $1.91 dividend (D0= $1.91). What percentage of the company's capital structure consists of deb..
Uses the information to adjust their bank product-pricing : As presented in class, write the formula for a bank’s net liquidity position ( + sources for liquidity) (- demands for liquidity). Explain what each category means and how bank management uses the information to adjust their bank’s product/pricing st..
Depreciated by the straight line method : Tocserp is considering the purchase of a new machine that will produce widgets. The widget maker will require an initial investment of $10,000 and has an economic life of five years and will be fully depreciated by the straight line method.

Reviews

Write a Review

Financial Management Questions & Answers

  What is approximate real rate of interest-exact real rate

Treasury bills are currently paying 9 percent and the inflation rate is 3.1 percent. What is the approximate real rate of interest? What is the exact real rate?

  Poor neighborhood struggles to reach its breakeven point

An independent family clinic located in a poor neighborhood struggles to reach its breakeven point each month. At their current visit levels, they need to collect an average of $100 per patient visit in order to breakeven each month. They have asked ..

  The market yield for bonds of similar risk and maturity

A company issued 10%, 10-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 8%. Interest is paid semiannually. At what price did the bonds sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of..

  Free cash flows and tax savings are expected to grow

An unlevered firm has a value of $850 million. An otherwise identical but levered firm has $50 million in debt at a 7% interest rate. Its cost of debt is 7% and its unlevered cost of equity is 11%. After Year 1, free cash flows and tax savings are ex..

  Assume that the risk-free rate has not changed

On Oct 10, 2015, gold on the spot market is at $1,000 an ounce. A forward gold contract for delivery of gold on Oct 10, 2016 is priced at $1,030. Three months pass and spot gold is still at $1,000. What should be the approximate price of the Oct 10, ..

  Differ from a protective call in terms of the objective

How does a covered call differ from a protective call in terms of the objective, advantages and disadvantages of each strategy?

  Expected and required rates of return-risk-free rate

Expected and required rates of return Assume that the risk-free rate is 4% and the market risk premium is 8%. What is the expected return for the overall stock market? Round your answer to two decimal places. What is the required rate of return on a ..

  Coupon bond with semiannual payments

Wine and roses, inc. offers a 7.0 percent Wine and Roses, Inc. offers a 7.0 percent coupon bond with semiannual payments and a yield to maturity of 7.75 percent. The bonds mature in 14 years. What is the market price of a $1,000 face value bond?

  Calculate the impact of the exhibit on company profit

Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Home and Ga..

  Market risk premium-preferred stock outstanding

You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent. Debt: 8,000 6.3 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 106 percent of par; the bonds make semiann..

  Types of employer plans

Which of the following types of employer plans are exempt from most or all ERISA provisions?

  Calculate the amount of net income reported

Grant, Inc. acquired 40% of South Company's common stock for $200,000 on January 1, 2014. In its 2014 cash flow statement, Grant, Inc. reported an operating cash inflow related to its investment in South Company of $6,800. Calculate the amount of net..

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