You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $20,900. Use of the truck will require an increase in NWC (spare parts inventory) of $2,900. The truck will have no effect on revenues, but it is expected to save the firm $20,300 per year in before-tax operating costs, mainly labor. The firm’s marginal tax rate is 35 percent. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

What are the monthly-nominal and effective interest rates : BMW is offering a 1-Series for $18,588. This can be financed with a down payment of $2,008.80 and $249 per month for 72 months. What are the monthly, nominal, and effective interest rates for this purchase? |

Working capital represents firms investment in assets : Derivatives are claims whose value is derived based on what happens to another underlying asset. As a general rule, the required return of common stocks is higher than the YTM of bonds issued by the same company. Working capital represents a firm’s i.. |

Expected yearly before-tax cash savings due to acquiring : Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $4,500 apiece and which you could probably use for another 2 years .. |

Evaluate the proposed acquisition of a new special : You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $20,900. The firm’s marginal .. |

Medical insurance : You have medical insurance for your family with a $250 deductible, 20% coinsurance, and $1,500 OOP maximum for each individual and $3,000 family OOP maximum. Calculate your OOP costs if three people in your family each incur $6,000 in medical costs. |

What is the amount of the lease-equivalent loan : Riverton Mining plans to purchase or lease $435,000 worth of excavation equipment. If purchased, the equipment will be depreciated on a straight-line basis over five years, after which it will be worthless. If Riverton purchases the equipment, what i.. |

Risk-free monthly lease rate : Suppose an H1200 supercomputer has a cost of $500,000 and will have a residual market value of $100,000 in 5 years. The risk-free interest rate is 6.1% APR with monthly compounding. What is the risk-free monthly lease rate for a 5-year lease in a per.. |

CPU chips with lower power consumption and heat generation : Consider two mutually exclusive R&D projects that ADM is considering. Assume the discount rate for ADM is 13 percent. Project A: Server CPU .13 micron processing project By shrinking the die size to .13 micron, ADM will be able to offer server CPU ch.. |

## Statements relating to market efficiency and current ratioWhich of the following statements relating to Market Efficiency is most correct? Which of the following transactions would decrease a firm’s Current Ratio? |

## Equivalent with the exception of the interest ratesYou are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 7.75 percent, compounded daily. Loan B offers a rate of 8 percent, compounded semi-annually. What loan should y.. |

## Is it possible for a firm to have too much cashIs it possible for a firm to have too much cash? Why would shareholders care if a firm accumulates large amounts of cash? What options are available to a firm if it believes it has too much cash? How about too little? |

## It usually engages in a long-term contract with thesexyz inc. is a large producer of chicken for grocery stores. it usually engages in a long-term contract with these |

## Compute the expected share price at the endHaving issues figuring this one out... Suppose the dividends for the Seger Corporation over the past six years were $1.06, $1.14, $1.23, $1.31, $1.41, and $1.46, respectively. Compute the expected share price at the end of 2014 using the perpetual gr.. |

## Arithmetic average return on the stock over five-year periodYou've observed the following returns on Doyscher Corporation's stock over the past five years: -25.8 percent, 14.2 percent, 31.4 percent, 2.6 percent, and 21.6 percent. What was the arithmetic average return on the stock over this five-year period? |

## What is the present value of his inheritanceHis recently departed dear Aunt Annie, may she rest in peace, has left Tom a 6-year annuity paying $4,500 per year. He will receive the first payment 4 years from today. If he is discounting at 7% (EAR), what is the present value of his inheritance? |

## Forecasts of revenues over the lifetime of projectThese are the forecasts of revenues over the lifetime of a project of 5 years. Assume all cash flows occur at the end of the year. What is the IRR of the project? |

## Value of the annuityA 4-year annuity of eight $8,200 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 14 percent compounded monthly, what is the value of this annuity five years from now? If the d.. |

## Compute the prospective rate of returnA project has a first cost of $120,000 and an estimated salvage value after 25 years of $20,000. Estimated average annual receipts are $25,900; estimated average annual disbursement are $15,060. Assuming that annual receipts and disbursements will be.. |

## Maturity than an otherwise identical noncallable bondA bond that is callable has a chance of being retired earlier than it started turn to maturity. Therefore, if the yield curve is upward sloping, an outstanding callable bond should have a lower yield to maturity than an otherwise identical noncallabl.. |

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