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New project analysis You must evaluate a proposal to buy a new milling machine. The base price is $106,000, and shipping and installation costs would add another $16,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $47,700. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $6,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $50,000 per year. The marginal tax rate is 35%, and the WACC is 10%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine. What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent. Year 1: 46,592. is correct Year 2: 54,900. is correct Year 3: Can not get the correct answer?
Garnishes, Inc. has sales for the year of $46,300 and cost of goods sold of $21,700. The firm carries an average inventory of $4,800 and has an average accounts payable balance of $4,400. What is the inventory period?
When Owens Corning emerged from bankruptcy in 2006, the debt holders became the sole owners of the company. But the old stockholders were not left entirely empty handed. They were given warrants to buy the new common stock at any point in the next se..
You want to have $6 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 9 percent and the inflation rate is 5.4 percent. What real amount must you deposit each year to achieve your goal?
Mr. Miser loans money at an annual rate of 20 percent. Interest is compounded daily. What is the actual rate Mr. Miser is charging on his loans? How do you calculate compounding interest?
Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline.
Your company (Apple Inc) is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique. Your company (Apple Inc) is considering the construction of a new building. The building will have an ..
Prepare an insurance plan for a Day Care Center for preschool children. Make sure you identify each component of the plan. The property that you are using for the center is rented facility in downtown Chicago. Also, for a fee, you provide bus service..
What is the conclusion of this argument? If sea levels rise dramatically then some low islands are at danger of disappearing. The Maldives are coral islands in the Indian Ocean none of which are more than six feet above sea level.
A $1,000 corporate bond with 20 years to maturity pays a coupon of 7% (semi-annual) and the market required rate of return is a0 6.6% b) 13%. What is the current selling price for a) and b)?
The current price of a stock is $94, and three-month European call options with a strike price of $95 currently sell for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2..
ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with nine years to maturity that is quoted at 115 percent of face value. What is ICU’s pretax cost of debt? If the tax rate is 30 percent, what is the af..
We have the following information for the company. The stock pays a $10 dividend, and it will grow by 100% the first year, 30% the second year and 3% forever after that. The unlevered beta is 1, D/E is 60/40 and the tax rate is .3. Additionally, we k..
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