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Nata, Inc., is considering the purchase of a $ 367.000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $ 67, 000 in five years. The computer will replace 5 office employees whose combined annual salaries are $112, 000. The machine will also immediately lower the firm's required net working capital by $87, 000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 39 percent. The appropriate discount rate is 15 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g. 32.16).)
A machine costs $73,000 initially and will have a salvage value of $10,000 after 9 years. It will also have an operating cost of $21,000 in year 1, with 5% continuing increases each year thereafter to year 9. The MARR is 19% per year. Compute the Equ..
You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenue (10000 visits) $416541 Wages and benefit $205597 Rent $4129 Depreciation $28555 Utilities $2495 Medical supplies $45344..
The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0990. The variance is 0.2540, and the variance of Sky Diamond is 0.1370. What is the correlation coefficient between the returns of the two stocks?
Companies U and L are identical in every respect except that U is unlevered while L has $10 million of 5.7% bonds outstanding. Assume that (1) all of the MM assumptions are met, (2) both companies are subject to a 31% federal-plus-state corporate tax..
Suppose the prospective buyers of houses become more optimistic about the future prices of houses while at the same time existing owners of houses become more pessimistic about the future prices of housing. Explain what you think will happen to the c..
Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worth..
Community hospital issued 20 year bonds six years ago with a 7% annual coupon rate. The bonds were called today at $1,079. What is the realized rate of return for someone who purchased the bonds for $1,000 when they were issued?
Which of the following is NOT a capital component when calculating the WACC? If a typical company uses the same cost of capital to evaluate all projects, what will happen?
You MUST show ALL of your work to receive credit on the problems. There will be significant point reductions if you do not show your work. You are considering acquiring a firm that you believe can generate expected cash flows of $10,000 a year foreve..
Discuss the difference between substitutes and complements and the difference between normal goods and inferior goods. How do managers and business owners use these concepts? Please provide real world examples.
What rate of return should Jacobs require on a project of average risk?- If a new venture is expected to have a beta of 1.6, what rate of return should Jacobs demand on this project?
According to the AE curve and Okun's law, what is the relationship between the real interest rate and unemployment?
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