User Account

All Pages

Considering acquiring a new computer

Assignment Help Financial Management
Reference no: EM131318101

Use the following information to answer the following 3 questions.

Your company is facing earnings pressure and is considering acquiring a new computer system that will initially cost $1 million and will save $300,000 per year in inventory and receivables management costs.  The system is will last for five years.

The system is expected to have a salvage value of $100,000 at the end of year 5 and will be depreciated to zero using three year MARCS (rates are: Year 1: .3333, Year 2: .4445, Year 3: .1481, Year 4: .0741). 

The marginal tax rate is 40%.  Assume a required rate of return of 11%.

  • Cash Flow From Assets in Year 5 is:
    • $180,000
    • $280,000
    • $240,000
    • $300,000
  • Net Present Value is:
    • $28,123.68
    • $28,744.07
    • $32,465.21
    • $27,682.15
  • Internal Rate of Return is:
    • 10.0%
    • 12.2%
    • 9.7%
    • 14.6%

Reference no: EM131318101

Questions Cloud

Net cash provided by operating activities and net income : Comment on the difference between net cash provided by operating activities and net income. Speculate on which number is likely to be the better indicator of long-term profitability.
Does media reflect culture or does it create culture : Communication, in the broadest terms, encompasses all media channels through which information is exchanged. That information can be exchanged in a myriad of ways or channels. As technology has progressed, we have seen the advent of the internet a..
Why is specialization so critical to distribution efficiency : Given the principle of minimum transactions, explain why it is possible to have too many participants in a distribution channel.
Decision tree or rule learner in r code : This homework is part of a private Kaggle competition, in the end we only want to submit an excel file with ID and Expected column, and I need the R code as well to submit. I am attaching the data files, both should be used in the code. The assign..
Considering acquiring a new computer : Your company is facing earnings pressure and is considering acquiring a new computer system that will initially cost $1 million and will save $300,000 per year in inventory and receivables management costs.  The system is will last for five years.
What is the value of this bond if the coupon payments : BA Corp is issuing a 10 year bond with a coupon rate of 8 percent and a par value of $1,000. The market interest rate on similar bonds is currently 6 percent. If the coupon payments are made annually, what is the value of this bond? Knight, Inc. has ..
Explain the rationale underlying volume consolidation : Explain the rationale underlying volume consolidation. What are the risks associated with using a single supplier for an item?
Do any of these firms appear to have a cash flow problem : Comment on the difference between net cash provided by operating activities and net income including noncontrolling interest. Speculate on which number is likely to be the better indicator of long-term profitability.
Percent and a standard deviation : Asset K has an expected return of 20 percent and a standard deviation of 35 percent. Asset L has an expected return of 8 percent and a standard deviation of 19 percent. The correlation between the assets is .44. What are the expected return and st..

Reviews

Write a Review

Financial Management Questions & Answers

  Techniques be used to monitor accounts receivable

What is credit monitoring?-  How can each of the following techniques be used to monitor accounts receivable?-  What are their attributes?

  What can a bank do to increase its core deposits

What can a bank do to increase its core deposits? What are the costs and benefits of such efforts? Generally, how might management estimate the relative interest elasticity of various deposit liabilities of a bank?

  Market risk premium-reward-to-risk ratios for stocks

Stock Y has a beta of 1.2 and an expected return of 14.5 percent. Stock Z has a beta of 0.7 and an expected return of 9.3 percent. If the risk-free rate is 5.6 percent and the market risk premium is 6.6 percent, the reward-to-risk ratios for stocks Y..

  The consensus forecast of security analysts

Suppose that the consensus forecast of security analysts of your favourite company is that earnings next year will be E1 = $5.00 per share. Suppose that the company tends to plow back 50% of its earnings and pay the rest as dividends.

  Financial analysis comparison

?Financial Analysis Comparison - I need to receive information on both companies - Data Requested The Coca-Cola Company.

  Relationship between bond value and interest rate changes

Discuss the relationship between bond value and interest rate changes. What effect do interest rate changes have on bond values on the secondary markets? As the maturity date on a bond approaches what happens to the effect, on bond value, of interest..

  What is the accounting break-even quantity

A project has the following estimated data: price = $79 per unit; variable costs = $46.61 per unit; fixed costs = $5,600; required return = 12 percent; initial investment = $6,000; life = six years. Ignore the effect of taxes. What is the accounting ..

  Assume rsu is the appropriate discount rate for tax shield

Carter Co. has a value of $70 million. Buleigh is otherwise identical to Carter Co., but has $28 million in debt. Suppose that both firms are growing at a rate of 6%, the corporate tax rate is 38%, the cost of debt is 8%, and Carter's cost of equity ..

  How much must price of a stock fall on the ex dividend date

How much must the price of a stock fall on the ex-dividend date in order to prevent a corporate holder from making arbitrage profits?

  Equation to forecast broussards additional funds

Broussard Skateboard's sales are expected to increase by 15% from $7.4 million in 2015 to $8.51 million in 2016. Its assets totaled $5 million at the end of 2015. Broussard is already at full capacity, so its assets must grow at the same rate as proj..

  Maintain constant growth rate in its dividends

Suppose you know that a company’s stock currently sells for $50 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it..

  Maturity annualized spot rates

Consider the following annualized spot rates: Maturity Annualized Spot Rates. Based on this information calculate the implied six-month forward rate one-and-a-half years from now.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd