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Your firm needs a computerized machine tool lathe which costs $50,000 and requires $12,000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35 percent and a discount rate of 12 percent. If the lathe can be sold for $5,000 at the end of year 3, what is the after-tax salvage value?
Nungesser Corporation's outstanding bonds have a $1,000 par value, a 6% semi-annual coupon, 7 years to maturity, and an 9.5% YTM. What is the bond's price? Round your answer to the nearest cent.
Describe one weakness and one strength of the gold standard. Do you agree with Milton Friedman that any system of pegged exchange rates is not a satisfactory system for countries with independent political systems; or do you agree with Ronald McKinno..
Both bond A and bond B have 7.6 percent coupons and are priced at par value. Bond A has 8 years to maturity, while bond B has 16 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in price of bond A and bon..
What is the value today of a stock that will pay a dividend of $4.10 one year from now, a $4.70 dividend in year two and a dividend of $5 three years from now if its expected price in year three is $35? The stock has a required rate of return of 11%.
Bond A has 4 years left to maturity and Bond B has 8 years left to maturity. They both have a 6% coupon rate, pays semi annually, and yield is 5%. Calculate the percentage change in each bond if interest rates suddenly increased by 2%.
Mitchell Auto Parts Inc. has estimated the probability distribution of its annual net cash flows as follows: Compute the expected annual cash flow. Compute the standard deviation of annual cash flows. Compute the coefficient of variation of annual ca..
Warner is expected to have its growth rate drop from 15% to 5% in 5 years. The last dividend was $2 and the discount rate is based on beta of 2, T bond rate of 6% and return of the market of 11%. First, find the value of Warner. Second, compute the y..
The Electrotech Corporation manufactures two industrial-sized electrical devices: generators and alternators. Both of these products require wiring and testing during the assembly process. Each generator requires 2 hours of wiring and 1 hour of testi..
Big Steves, maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $90,000 and will generate net cash inflows of $21,000 per year for 9 years. What are the projects NPV us..
Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 6.2%. What is the duration if the yield to maturity is 10.2%?
The formula for calculating the present value (PV) of a perpetuity is PV = PP/(1 + i), where PP is the perpetuity payment and i is the discount rate. Common stock represents ownership of the firm. A mortgage bond is secured by a lien on real property..
discuss two of the biggest challenges facing financial managers today. one of the articles should be about the
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