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Your company is considering the replacement of an old delivery van with a new one that is more efficient. The old van cost $40,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight-line method over a useful life of 8 years. The old van could be sold today for $7,000. The new van has an invoice price of $80,000, and it will cost $6,000 to modify the van to carry the company's products. Cost savings from use of the new van are expected to be $28,000 per year for 5 years, at which time the van will be sold for its estimated salvage value of $18,000. The new van will be depreciated using the simplified straight-line method over its 5-year useful life. The company's tax rate is 35%. Working capital is expected to increase by $5,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the incremental free cash flow for year one?
Select one:
a. $19,985b. $22,305c. $18,875 d. $24,220
Firm has preferred stock selling for 95% of par that pays an annual 8% coupon . what be the firm's component cost of preferred stock?
Write down name of 5 firms which issue commercial paper in Singapore. How did subprime crisis influence market for commercial paper in developed economics. (You only require to give overall trends, specific examples).
Create a straddle by buying the October 35 call and the October 35 put. What's the maximum loss for this position and what stock price will produce it? Where will you break even? Why would an investor establish a position like this?
Define Comparison of borrowing costs based on annual percentage yield and the bond has a 20-year life
You are an businessman whose business requires $10 million in investment. A venture capital organization undertakes due diligence and offers to provide the funds in exchange for 50 percent ownership of the company.
Describe what the management rationale (motive) behind the acquisition of AirTran, whether you agree with the management or you differ with the management strategy.
Real estate, Inc., has purchased a building for $1 million. the economic life of the building is thirty years and it will be fully depreciated over the thirty years using the straight line depreciation method.
ABC Inc. is expected to pay $1.51 dividend at the end of the year and is expected to pay the same amount of dividend forever. What is its stock price, assuming it has a required return of the stock is 9%? Please show work.
You're chief executive officer of multinational's subsidiary in developing host country. The subsidiary has been in business for about 8 years, making electric motors for the host country's domestic market, with mediocre financial results.
Bureau of Labor Statistics reported that in May 2007 total labor force was 152,762,000 of a possible 231,480,000 working age adults.
Assume that (1) all of the MM assumptions are met, (2) both firms are subject to a 40% federal-plus-state corporate tax rate, (3) EBIT is $2 million and (4) the unlevered cost of equity is 10%
1. Does your company prepare reports that compare actual to budgeted performance?
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