An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,080,000 and will be sold for $1,280,000 at the end of the project. If the tax rate is 35 percent, what is the after tax ..
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Pennsylvania steel, one of the largest steel companies in the united States, is considering whether it has any excess debt capacity. The company has $527 million in market value of debt outstanding and $1.76 billion of market value o equity. Estimate..
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A study of the last four graduating classes indicates the following average salaries: $30,000, $32,000, $34,500, and $36,000 (last graduating class). Predict the starting salary for the next graduating class using a simple exponential smoothing model..
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Your stock investments return 8%, 12%, and -4% in consecutive years. What is the geometric return?. What is the sample standard deviation of the above returns?
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A bank is trying to determine which of two machines should be rented to process checks. Machine 1 rent for $10,000 per year and processes 1,000 checks per hour. Machine 2 rents for $15,000 per year and processes 1,600 checks per hour. Assuming that i..
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Seven years ago, Goodwynn & Wolf Incorporated sold a 20-year bond issue with a 14% annual coupon rate and a 9% call premium. Today, G&W called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of retur..
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A company is composed of five cost centers. Each month a budget is prepared anticipating the distribution of overhead costs to the centers. Let Cw be costs incurred within the cost center, such as depreciation, supplies and indirect labor, and let Cm..
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You deposit a sum of $10,000 today in your bank safe deposit box and leave it there. You learn nothing in your bank account as the money is sitting inside the safe deposit box. Assumes that inflation rate is running at 14% a year. How much will your ..
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Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 11 percent, and the company just paid a di..
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The noncallable bonds mature in 20 years, they have a 8% annual coupon rate and a par value of $1,000 and a market price of $1,050.00. The tax rate is 40% and the risk free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20..
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Bridgewell Industries is evaluating the option of purchasing a fork-lift truck costing $60,000. If purchased, the truck will replace 4 workers, each with an average annual salary of $15,000. However, an experienced fork-lift operator will have to be ..
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Decision makers and analysts look deeply into profitability ratios to identify trends in a company’s profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive
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