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Replacement problem when old machine has a positive book value. Assume the same facts as in Problem except that the new machine will have a salvage value of $12,000. Assume further that the old machine has a book value of $40,000, with a remaining life of eight years. If replaced, the old machine can, at present, be sold for $15,000. Should the machine replacement be made?
Problem Basic replacement problem. The Virginia Company is considering replacing a riveting machine with a new design that will increase the earnings before depreciation from $20,000 per year to $51,000 per year. The new machine will cost $100,000 and have an estimated life of eight years, with no salvage value.
The applicable corporate tax rate is 40%, and the firms cost of capital is 12%. The old machine has been fully depreciated and has no salvage value. Should it be replaced by the new machine?
A company has $6.10 per unit in variable costs and $4.30 per unit in fixed costs at a volume of 50,000 units. if the company markes up total costs by 0.42, what price should be charged if 60,000 unts are expected to be sold?
ssume a tax rate of 6.2% on $110,100 for Social Security and 1.45% for Medicare. No one will reach the maximum for FICA. - Complete the following payroll register
Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. The stock is classi?ed as available-for-sale. Prepare ..
What is the net present value of a project with the following cash flows if the discount rate is 15 percent?
Mark purchased a very expensive automobile on credit. Within a week, Mark discovered that a tune-up was necessary, for he was in the habit of driving at an excessive rate of speed. When the car was repaired, the bill was more than $1,000. Mark does n..
How is a net present value profile used to compare projects? What causes conflict in the ranking of projects via net present value and internal rate of return? Does the assumption concerning the reinvestment of intermediate cash inflows tend to favor..
If uncovered interest parity holds, what spot exchange rate do investors expect to exist in 90 days?- What will happen in the foreign exchange market?
Find the interest rates earned on each of the following-You borrow $650 and promise to pay back $689 at the end of 1 year. You borrow $92,000 and promise to pay back $321,858 at the end of 12 years.
Evaluate the environmental factors that contribute to corporate management’s need to manage corporate earnings to align with market expectations, indicating the potential long- term risks to financial performance and sustainability.
Acme Corporation just paid a dividend of D 1 = $1.72. Analysts expect the company's dividend to grow by 10% between year 1 and 2, and at a constant rate of 5% from year 2 to 3 and continue with the 5% thereafter. The required return on this low-risk ..
The internal rate of return will equal the discount rate when the net present value equals zero. The main disadvantage of the NPV method is the need for detailed, long-term forecasts of free cash flows generated by prospective projects. The modified ..
An investment offers $6,200 per year for 20 years, with the first payment occurring one year from now. If the required return is 7 percent, what is the value of the investment? What would the value be if the payments occurred for 45 years? What would..
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