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Your firm is contemplating the purchase of a new $794,500 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $58,000 at the end of that time. You will save $178,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $53,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. Required: If the tax rate is 35 percent, what is the IRR for this project? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) IRR %
A project that provides annual cash flows of $10857 for eight years costs $76853 today. At what discount rate would you be indifferent between accepting the project and rejecting it?
What is the company's Foreign Exchange (FX) Risk Management Policy? Is centralized or decentralized
A man wants to deposit $50,000 in a bank that pays 12% interest compounded semiannually for 6 years. At year 6, he loses $60,000 from the future of value of the $50,000. He wants to withdraw an equal amount every year for the first six years after lo..
Next year Holyspirit healthcare organization will serve 100 patients in the following manner-30 Medicare Patients who pay $850/diagnosis. 25 Medicaid patients who pay $900 per diagnosis. Calculate the charge necessary to cover ABC’s cost
A 6.30 percent coupon bond with ten years left to maturity is priced to offer a 7.6 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent. What is the change in price the bond will experience in dollars?
On its most recent annual financial statements, Wilmington Casket Company reported total assets of $750,000, total equity of $519,000, sales of $475,000, net income of $98,000 and interest expense of $12,400. What is the common-size statement value o..
Do you think the one-year forward rate would underestimate, overestimate, or be an unbiased estimate of the future spot rate in one year? Explain.
Suppose the Texas lottery advertises that it pays its winner $10 million. However, this prize money is paid at the rate of $500,000 each year (with the first payment being immediate) for a total of 20 payments. What is the present value of this prize..
Berkshire Hathaway Inc. (NYSE: BRK.A) would like to hedge its $5 million exotic insurance portfolio by using S&P 500 futures. Having heard about your excellent grades in the Derivatives class, Berkshire chairman Warren E. Buffett has hired you as a c..
Suppose you are facing the following capital budgeting proposal: $100,000 initial cost, to be depreciated straight-line over 5 years to an expected salvage value of $ 5000, 35% tax rate, $45,000 additional revenues for the first year and it is growin..
Consider a mining project in which there are costs to open the mine and to seal the mine at the end of the project. Consider the following cash flows for the project: --$3,787,879 initially, $8,712,121 one year from today, and --$5,000,000 two years ..
You will make a variety of decisions. You should consider the financial and nonfinancial aspects while making decisions - evaluate scenarios, you will also use some tools such as net present value (NPV) and return on investment (ROI) that you have d..
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