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The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,060,000, and it would cost another $24,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $619,000. The MACRS rates for the first three years are 0.3333, 0.4445, 0.1481, and 0.0741. The machine would require an increase in net working capital (inventory) of $16,000. The sprayer would not change revenues, but it is expected to save the firm $467,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%.
1. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)? Round your answer to the nearest dollar.
2. If the project's cost of capital is 13 %, what is the NPV of the project? Round your answer to the nearest dollar.
The Young Han Consulting Group (YHCG) is expanding into a new line of business. Aa result the company plans to increase its annual dividend by 12 percent a year for the next three years and then decreasing the growth rate to 3 percent per year. YHCG ..
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part 1primary task response your first task is to post your own key assignment outline to the discussion area so that
You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 0.85. You are considering selling $100,000 worth of one stock with a beta of 1.05 and using the proceeds to purchase anoth..
Suppose that a firm’s recent earnings per share and dividend per share are $2.70 and $1.70, respectively. Both are expected to grow at 7 percent. However, the firm’s current P/E ratio of 26 seems high for this growth rate. The P/E ratio is expected t..
One drawback of switching from a partnership to the corporate form of organization is the following:
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