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Furman Industries is negotiating a lease on a new piece of equipment which would cost $200,000 if purchased. he equipment falls into the MACTS-3-year class and it would be used for three years and then sold, because Furman plans to move to a ne facility at that time. It is estimated that the equipment could be sold for $30,000 after three years of use. A maintenance contract on the equipment would cost $3000 per year payable at the beginning of each of the three years of usage. Conversely, Furman could lease the equipment for three years for a lease payment of $70,000 per year, payable at the beginning of each year. The lease would include maintenance. Furman is in the 40% tax bracket, and it could obtain three year simple interest loan to purchase THE Equipment at a before tax cost of 10%. What should furman do?
One-year Treasury bills currently earn 3.85 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 4.05 percent. The liquidity premium on 2-year securities is 0.10 percent. If the liquidity theory is correct, what sho..
Felicia & Fred are considering the introduction of a new product line of jewelry featuring crystals imported from the Czech Republic. The manufacturing plant offers crystals in all colors, sizes, and shapes cut to the design specifications of their c..
Kerri purchased a term insurance policy when she had high life insurance needs and limited income. Now she can afford whole life insurance. What term life insurance provision will permit Kerri to switch her term insurance to whole life insurance with..
The marketing department at Cable TV (CTV) wants to know how promotional advertising affects the number of viewers for the Saturday Night Movie. Research shows that 10 million viewers watched the movie when CTV ran 15 one-minute ads on Friday. When t..
A 30-year corporate bond sold to investors at par ($1000) with a 10 percent coupon rate is called sixteen years later at a 12 percent call premium. At the time of call, prevailing rates on comparable securities were 8 percent. If the bond's holder re..
Lambardi Company sells 3 types of bags. Bag A sells for $17 and has variable cost of $9.00 per unit. Bag B sells for $12 and has variable cost of $12.00 per unit. What is the weighted average contribution margin per unit for Lambardi?
Assume that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 6%. Your company is about as risky as the average firm in the industry. what is the value per share of your firm's sto..
Suppose that you bought GE 6 years ago at a price of $128 per share. The price has decreased to $75. What is Standard Return for GE's Stock over the entire 6 year period assuming that GE paid no dividends over the 6 years? What is the Log Return for ..
What are the primary criteria in selecting marketable securities for inclusion in a firm's portfolio? What types of marketable securities are most suitable for inclusion in a firm's portfolio?
A four-year bond has an 8% coupon rate and a face value of $1,000. If the current price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual interest payments).
Royal Road Company, Inc. wants to increase its debt by selling bonds to $ 900 par value with a coupon interest of 13% to 10 years, in which they will be paying annual interest. To make the sale, a $ 30 bonus will be offered. Costs incurred in this is..
The market value of Cable Company's equity is $60 million, and the market value of its risk-free debt is $40 million. If the required rate of return on the equity is 15% and that on the debt is 5%, calculate the company's cost of capital. (Assume no ..
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