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Coiner Clothes is contemplating the replacement of one of its knitting machines with a newer, and more efficient one. The old machine has a book value of $600,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to another firm in the industry for $265,000. The old machine is being depreciated by $120,000 per year, using the straight- line method. The new machine has a purchase price of $1,175,000, an estimated useful life MACRS class life of 5 years, and an estimated salvage value of $145,000. The applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. The new machines is expected to save on electric power usage, labor and repair costs, as well as to reduce the number of defective articles of clothing. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company’s marginal tax rate is 35% and it has a wacc of 12%. Should the firm purchase the new machine? Clearly support your answer
explain the difference between and importance of arithmetic, geometric, and dollar weighted returns
Conduct a current health insurance situation analysis for the Bedos. Be sure to assess the following: a. The after-tax costs of their current plans compared to purchasing an individual policy. b. The use of a tax-advantaged account as a health insura..
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$ 39,400,000 1 63,400,000 2 – 12,400,000 a-1 What is the NPV for the project if the company requires a return of 10 percent?
A broker offers to sell you shares in Bay Area Healthcare, which just paid a dividend of $2 per share. The dividend is expected to grow at a constant rate of 5 percent per year. The stock’s required return is 12 percent. What is the current value of ..
Evaluate Arrow's direct material variances, compute Arrow's direct labor variances and find Arrows variances for factory overhead.
Central bank directly controls both inside and outside money. Outside money is that part of the money supply produced by the private banking system. Inside money refers to the quantity of notes and coin in the economy.
What interest rate does Surething Inc.. need to offer to make Hugh indifferent between investing in the two bonds?
What is the required rate of return if the market risk premium increased to 20% because of the increase in investors' risk aversion assuming that the return on the risk-free asset remains the same as in question 2 above.
Great Lakes Health Network’s net income increased from $3.2 million in 2001 to $6.4 million in 2011. The total growth rate over the ten years is 100 percent, while the annual growth rate is only about 7.2 percent, which is much less than 100 percent ..
Assume that the average firm in your company's industry is expected to grow at a constant rate of 6% and that its dividend yield is 8%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&..
Discount rate to use to evaluate the purchase of a new warehouse facility. To finance the purchase, GBH will sell 20 year bonds with a $1,000 par value paying 7.5 percent per year (paid semi annually) , at the market price of $955. Preferred stock pa..
Imagine that you own an independent paint and home decorating store. To determine which product lines bring in the most revenue, you have created the following table.
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