Customer Service Chat
Get quote & make Payment
NPV, Financial Management
2.5. Västerås Corporation plans to buy a truck for $40,000 and depreciate it fully over 5 years using straight-line method of depreciation. However, it plans to use it for 8 years and then sell it for an unknown amount. The truck will save $8000 annually, before taxes. The discount rate in this case is 12% and the income tax rate 33%. Find the resale value of the truck after 8 years just to break even.
2.6. Örebro Hospital, a non-profit entity, wants to buy a machine for $30,000, which will run for 7 years. The savings from the machine is uncertain, with expected value $5000 per year, and standard deviation $1000. The hospital uses 11% as the discount rate and it does not pay any income taxes. Find the probability that the machine will be profitable, that is, it has a positive NPV.
2.7. Linköping Cancer Institute is planning to acquire an NMR machine at a cost of $24 million. The machine has an uncertain life span: it may last for 6 years (probability 50%), 7 years (probability 30%), or 8 years (probability 20%). The Institute will depreciate the machine on a straight-line basis with a life of 6 years, with no residual value. While the machine is in operation, it will generate a pretax income of $6 million annually. The tax rate of Institute is 40% and it uses a discount rate of 9%. Should the Institute buy the new machine?
2.8. Helsingborg Corporation is considering the purchase of a new machine that has an expected life of 5 years with a standard deviation of 2 years. The machine will cost $40,000 and will generate a pre-tax income of $10,000 annually. The tax rate of Helsingborg is 40% and its cost of capital is 7%. Helsingborg will depreciate the machine on a straight-line basis over 5 years with no residual value. Calculate the probability that the machine will have a life of between 4 and 7 years. Is the machine acceptable if it runs for only 4 years?
Posted Date: 11/2/2012 4:27:19 PM | Location : United States
Ask an Expert
NPV, Assignment Help, Ask Question on NPV, Get Answer, Expert's Help, NPV Discussions
Write discussion on NPV
Your posts are moderated
Write your message here..
Types of investment decisions, Q. Types of investment decisions? (1) Sh...
Q. Types of investment decisions? (1) Short-term investment decisions: - This kind of investment decisions related to the short-term assets. These decisions are as well called
Explain the nature of a concessionary loan, What is the nature of a concess...
What is the nature of a concessionary loan and how is it handled in the APV model? A concessionary loan is a loan that is provided by a governmental body at below the normal ma
price of the bond be if it is downgraded, Andrew Industries is contemplati...
Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1000. Andrew believes it can get a rating of A from
Name two patterns of cash flows for a share of common stock, Name two patte...
Name two patterns of cash flows for a share of common stock. How does the market define the value of the most common cash flow pattern for common stock? Cash flows for a share
#tFuture Value, You deposit $3,000 in a back account that pays 10% annually...
You deposit $3,000 in a back account that pays 10% annually, how much would you have im your account after 5 years?
Tokyo stock exchange, Tokyo Stock Exchange In the 1870s, a securities s...
Tokyo Stock Exchange In the 1870s, a securities system was introduced in Japan and public bond negotiations began. This resulted in a demand for public trading institution, whi
What are the objectives of financial management, What are the Objectives of...
What are the Objectives of Financial Management To make wise decisions a clear understanding of the objectives that are sought to be achieved in compulsory. Objectives provide
Expected monthly return, In this exercise you will construct efficient port...
In this exercise you will construct efficient portfolios with 5 risky assets using Excel's non-linear optimization routing "Solver". The questions are designed to be sequential and
Accept-reject rule, Accept-Reject Rule: The decision rule is to accept ...
Accept-Reject Rule: The decision rule is to accept the project if the computed payback period is less than the standard. If not, reject it. While ranking the projects, projec
Commercial paper, Commercial Paper (CP) is a short-term unsecured pro...
Commercial Paper (CP) is a short-term unsecured promissory note issued in the open market. It also represents the obligation of the issuer. Normally, it is issued
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.