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..
Analysis of financial plans, Part 1: Contingency plan Create contingency pl...
Part 1: Contingency plan Create contingency plans for the following scenarios: > One of your highly qualified consultants has given three months notice and is planning to move to a
Foreign exchange - maximum loss, Q. Foreign exchange - Maximum loss? Fr...
Q. Foreign exchange - Maximum loss? From Marton's point of view an adverse outcome is depreciation of the dollar against sterling as this lowers its income when converted into
Cost of Capital, The Nu-Nu Brothers Inc. (NNBI) has the following capital s...
The Nu-Nu Brothers Inc. (NNBI) has the following capital structure, which it considers to be optional: Debt 25% Preferred Stock 15% Common Equity 60% NNBI''s expected net income t
Operating cycle, applicability of an operating cycle in a vegetable growing...
applicability of an operating cycle in a vegetable growing business
Explain the currency trading at a discount, What is meant by a currency tra...
What is meant by a currency trading at a discount or at a premium in the forward market? Answer: The forward market includes contracting today for the future purchase or sale o
Show company monetary statements, It is true that company monetary statemen...
It is true that company monetary statements will often consist of narrative information about staff as a key resource. However, under accounting regulation this resource is not sho
What do you mean by misappropriation of fund, Q. What do you mean by Misapp...
Q. What do you mean by Misappropriation Of Fund? Misappropriation Of Funds allotted for specific works under capital or Revenue demand but the expenditure is incurred for anoth
Explain exchange rate risk, Explain Exchange Rate Risk Exchange-rate ri...
Explain Exchange Rate Risk Exchange-rate risk denotes to the risk the swap bank faces from fluctuating exchange rates throughout the time it takes the bank to lay off a swap it
How to calculate the net income of a year, Is the net income of a year the ...
Is the net income of a year the money the company made that particular year or is it a number whose significance is quite doubtful? The net income of a year is not money that a
Explain the sharpe performance measure, Explain the concept of the Sharpe p...
Explain the concept of the Sharpe performance measure. Answer: The Sharpe performance measure abbreviated as SHP is a risk-adjusted performance measure. It is denoted as the mea
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
IT Courses and 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.