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Your company is considering the purchase of a new machine. The original cost of the old machine was $75,000; it's 5 years old, and it has a current market value of $20,000. The old machine is being depreciated over a 10-year life toward a zero estimated salvagevalue on a straight-line basis, resulting in a current book value of $37,500 and an annual depreciation expense of $7,500. The old machine can be used for 6 more years but has no market value after its depreciable life is over. Management is contemplating the purchase of a new machine whose cost is $60,000 and whose estimated salvage is zero. Expected before-tax cash savings from the new machine are $10,000a year over its full MACRS depreciable life. Depreciation is computed using MACRS over a 5-year life, and the cost of capitial is 9 percent. Assume a 40 percent tax rate. What will the year 1 operating cash flow for this project be?
A company is 30% financed by risk-free debt. The interest rate is 8%, the expected market risk premium is 6%, and the beta of the company's common stock is 0.69.
Cascade Water Company (CWC) currently has 30,000,000 shares of common stock outstanding that trade at a price of $42 per share. CWC also has 500,000 bonds outstanding that currently trade at $923.38 each.
Calculation of yield to maturity on bond with given data and The bonds had a coupon rate of 4.5%
Operating costs other than reduction, also $5,402 of depreciation. Company had no amortization charges also no non- operating income.
Evaluate the book value per share, find earnings per share and calculate Haley Corporation's dividend yield
Bedford Mattress Company issued preferred stock many years ago. It carries a fixed dividend of $11 per share. With the passage of time, yields have gone down from the original 12 percent to 8 percent (yield is the same as required rate of return).
Shrieves's corporate tax rate is 40%, and 70% of the dividends received are tax exempt. Find the after-tax rates of return on all three securities. Round your answers to two decimal places.
After collection all the information and prepares the following table - accordingly, compute the component costs of debt, preferred stock, and common stock.
Assume you won the lottery and were offered a choice of either $500,000 in cash or a gamble in which you would get $1 million if a head were flipped but zero if a tail came up.
If someone is 21 years old, deposits $5000 each year into a traditional Individual Retirement Account how much money will be in the account upon retirement?
How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month?
Also, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasury and corporate 10-year bonds is 1.15%. What is the default risk premium on corporate bonds?
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