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Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,980,000 and will last for 4 years. Variable costs are 33 percent of sales, and fixed costs are $130,000 per year. Machine B costs $4,790,000 and will last for 7 years. Variable costs for this machine are 26 percent of sales and fixed costs are $120,000 per year. The sales for each machine will be $9.58 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight-line basis.
(a) If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A?
(b) If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B?
Calculate breakeven point from the given below information? As percent of sales, determine its variable or contribution margin?
What is the annual amount that Paul can spend while on his world our if he will have no money left in the bank when he dies? Assume Paul has a remaining 25 years and earns 9 percent on his savings.
Do the tax consequences change if Marilyn's assignment is for a period of more than one year and is for an indefinite period rather than a temporary period?
What must the coupon rate be on Merton's bonds? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16). )
The one-year interest rate is 5%, the two-year rate is 6%. Using the pure expectations theory, what is the implied forward rate from year 1 to year 2?
Mustaine, Inc., has a current stock price of $54. For the past year, the company had net income of $7,900,000, total equity of $26,300,000, sales of $50,500,000, and 4.1 million shares of stock outstanding.
How sensitive is the NPV to changes in the price of the new smart phone?
Abby Lockheart, a quality control supervisor for Intensive care, Corporation, is concerned about an rise in distribution costs per unit from $3 to $3.27 over the last 3 years.
Determine the amount of U.S dollars needed in 1 year if a forward hedge is used.
Explain how a net present value (NPV) profile is used to compare projects. How does this compare to internal rate of return (IRR)? How does reinvestment affect NPV and IRR?
Hachey Corporation has accounts receivable of $95,100 at March 31, 2007. An analysis of the accounts shows these amounts.
why is it possible for investments to have a higher net present value than a competing investment but still have a
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