Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35 percent and a discount rate of 13 percent.

Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.)

Depreciation tax shield $

What is the bond-yield-plus-risk premium estimate : The current price of Williams 10 percent coupon price, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,140.00. The firm uses the maximum of the risk premium range. What is the bond-yield-plus-risk premium estimate for .. |

Target debt–equity ratio-what is the company wacc : Tulloch Manufacturing has a target debt–equity ratio of .64. Its cost of equity is 14.6 percent, and its pretax cost of debt is 9.6 percent. If the tax rate is 34 percent, what is the company’s WACC? (Do not round intermediate calculations and enter .. |

What stock price would you consider appropriate : The Spring Flower Co. has earnings of $2.15 per share. The benchmark PE for the company is 12. What stock price would you consider appropriate? What if the benchmark PE were 15? |

How many coffee machines must be sold for firm to break even : Suppose that a firm manufactures coffee machines and sells them for $170 each. The costs incurred during the production and sale of these machines are $566921 plus $59 for each machine produced and sold. How many coffee machines must be sold for the .. |

Calculate the depreciation tax shield for project in year : Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category... |

About the salvage value after tax : Your firm needs a computerized machine tool lathe which costs $53,000 and requires $12,300 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. If the lathe can be sold for $5,300 at the end of year 3, wh.. |

Pitfalls in evaluating risky projects : According to the article "Pitfalls in Evaluating Risky Projects" by James E. Hodder, What are the three pitfalls that can be encountered when the DCF methodis used to make decisions? |

What would be the effective cost of the bank loan : Adams Manufacturing Inc. buys $10.3 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. What would be the nomin.. |

Please evaluate the equal annual annuity : Please evaluate the equal annual annuity for the following repeated project. The initial investment for the project is $1 million and it will produce cash flows $0.5 million, $1.0 million, $0.8 million in year 1, 2 and 3. The discount rate is 5%. |

## What are the advantages and disadvantages of using creditExplain the three types of credit. Under what conditions might a consumer find each type useful?- What are the advantages and disadvantages of using credit? |

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## Calculate approximate duration and approximate convexityCalculate the approximate duration and approximate convexity measure of the bond.- Calculate the total dollar coupon interest that will be paid at the end of the first year. |

## Returns for various states of the economyStock A has the following returns for various states of the economy: |

## What is the ending inventoryA firm is constructing a forecast balance sheet and wants to estimate future inventory using its inventory turnover ratio rather than its production schedule. If the inventory turnover ratio is 3.4, the cost of goods sold $1,309,000, and the beginnin.. |

## What is the company target debt-equity ratioFama's Llamas has a weighted average cost of capital of 11.5 percent. The company's cost of equity is 17 percent, and its pretax cost of debt is 8 percent. The tax rate is 33 percent. What is the company's target debt-equity ratio? |

## Invest in a stock portfolioYou have $100,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15% and Stock Y with an expected return of 10% |

## What would her percentage return be in load fund return caseAlex invested $9,530 in a mutual fund at a time when the price per share was $10. The fund has a load fee of $50. How many shares did she purchase? Alex later sells her shares in the mutual fund for $12 per share. What would her percentage return be .. |

## Pays an annual coupon ratePierre Dupont just received a cash gift from his grandfather. He plans to invest in a five-year bond issued by Venice Corp. that pays an annual coupon rate of 4.71 percent. If the current market rate is 6.45 percent, what is the maximum amount Pierre.. |

## Demonstrat ing the potential risk from financingDiscuss the pros and cons of financing in unhedged Eurodollars instead of via Euroeuros. As you do this you must give consideration to the foreign exchange risks associated with financing in Eurodollars. |

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