What is the present worth equivalent cost to the contractor

Assignment Help Financial Management
Reference no: EM131009903

A grader costs $350,000 to purchase and is expected to have a useful life of 8 years. Annual operating and maintenance costs are estimated to be $35,000 per year, and the salvage value after 8 years of use is estimated to be $50,000. At an interest rate of 9%, what is the present worth equivalent cost to the contractor of owning and operating the grader?

Reference no: EM131009903

Questions Cloud

Bond valuation : (Bond valuation) Pybus Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of 9%. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get an AA rating on its bonds and, ..
The growth rate in dividend is expected : A common stock has just paid a dividend of $1.64/share. The dividend is expected to grow by 16% for the coming 25 years. After that, the growth rate in dividend is expected to be 5% per year in perpituity. The RRR on the stock is 10%. What is the val..
Compute the prospective rate of return : A project has a first cost of $120,000 and an estimated salvage value after 25 years of $20,000. Estimated average annual receipts are $25,900; estimated average annual disbursement are $15,060. Assuming that annual receipts and disbursements will be..
What is the present worth equivalent cost to the contractor : A grader costs $350,000 to purchase and is expected to have a useful life of 8 years. Annual operating and maintenance costs are estimated to be $35,000 per year, and the salvage value after 8 years of use is estimated to be $50,000. At an interest r..
The risky portfolio and the risk-free asset : A portfolio has an expected rate of return of 14% and a standard deviation of 22%. The risk-free rate is 4%. An investor has the following utility function:. U = E(r)-1/2(A)σ2 Which value of A makes this investor indifferent between the risky portfol..
How are exchange-traded funds-unit investment trusts : How are exchange-traded funds (ETFs) and unit investment trusts (UITs) different from index mutual funds, and from each other? Please list your points.
Republican party economic platform during the civil war era : What were the key elements of the Republican Party economic platform during the Civil War era? Give examples of legislation passed by Republicans during the Civil War and Reconstruction that had economic implications. Why were they important?
What is the holding period return for your portfolio : Last year you purchased 650 shares of stock for $20.5 per share and 4 coupon bonds with 6% coupon rate for $1,000 each. Over the course of the year, you received dividends totaling $1.2 per share. Today stock is selling at $21.5 per share and bond is..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Calculate the amount of the favorable price variance

Using the information in the table below, calculate the amount of the favorable price variance.

  What will be the effect on cash flows of this sale

Suppose you sell a fixed asset for $50,000 when its book value is $60,000. If your company's marginal tax rate is 40%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

  Straight line depreciation schedule

Tried and true home repair is considering replacement of its bobcat. The old Machine cost $150,000 and was depreciated using a 5 year straight line depreciation schedule. The machine has been in operation for three years. It could be sold for $30,000..

  What rate did sales grow

Sales for Hanebury Corporation's just-ended year were $10 million. Sales were $5 million 4 years earlier. At what rate did sales grow? Round your answer to the nearest whole.

  Options to be as profitable as an investment in the stock

The price of a stock is $25 and the price of a three-month call option on the stock with a $27 strike is $2.50. Suppose a trader has $2,500 to invest and is trying to choose between buying 1,000 options (10 contracts) or 100 shares of stock. How high..

  About the retirement account

Starting today, George is going to contribute $300 on the first of each month to his retirement account. His employer will contribute an additional 50% of the amount George contributes. If both George and his employer continue to do this and he can e..

  What is the importance of different interest rate forecasts

List the basic steps in DGAP analysis. What is the importance of different interest rate forecasts?

  Issued preferred stock with stated annual dividend

Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 11% of its $100 par value. Preferred stock of this type currently yields 8%. Assume dividends are paid annually. What is the value of Rolen's preferred stock?

  Reporting under international financial reporting standards

From the e-Activity, contrast the impairment of goodwill on the financial statements of the entity reporting under international financial reporting standards (IFRS) that you researched with the impairment of goodwill on the financial statements of t..

  Influence the effectiveness or ineffectiveness of leaders

Your analysis of how followers can influence the effectiveness or ineffectiveness of leaders Hint: Your analysis should consider how the "followers" empower or enable the leader's behaviors (for good or bad).

  What is the cost of equity after recapitalization

O’Connell & Co. expects its EBIT to be $42,000 every year forever. The firm can borrow at 6 percent. O’Connell currently has no debt, and its cost of equity is 10 percent and the tax rate is 35 percent. The company borrows $108,000 and uses the proce..

  The accumulated sum of the following stream of payments

What is the accumulated sum of the following stream of payments? $21,509 every year at the beginning of the year for 15 years, at 7.84 percent compounded annually.

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