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You must evaluate the proposal to buy new milling machine. The base price is $108,000, and shipping an installation costs would add another $12,500. The machine falls into MACRS 3 -year class and it would be sold after 3 years for $65,000. The applicable rates of depreciation are 33%, 45%, 15%, and 7%. The machine requires a $5,500 increase in working capital. There would be no effect on revenues, but pretax labor cost will decline by $44,000 per year. The marginal tax rate is 35% and WACC is 12%.
a. What is an initial cost of the investment?
b. What are annual depreciation charges?
The "Inflation-Plus" CD is the safer investment because it guarantees the purchasing power of the investment.
Winder Corporation is a specialty component manufacturer with idle capacity. Management would like to use its extra capacity to generate additional profits
Depending upon the state of the economy, Ables Manufacturing Corporation expects to sell the following number of prefabricated buildings. The probability of each state is indicated.
Computation of expected return using CAPM approach and Required rate of return-Assume that the risk-free rate is 6 percent
Multiple choice questions on project evaluation, dividend Policy and bond valuation - conflicts of interest between stockholders and bondholders?
Calculation IRR, NPV, MIRR, payback and discounted payback and if the projects are mutually exclusive, which would you recommend
Elephant Books sells paperback books for $7 each. The variable cost per book is $5. At current annual sales of 200,000 books, the publisher is just breaking even.
Using the appropriate tabels find out how much will be accumulated in the fund on December 31, 2012 under each of the following situations:
Suppose that you are the CFO of a firm contemplating a stock repurchase next quarter. You know that there are many methods of decreasing the current quarterly earnings,
State pricing theory and no-arbitrage pricing theory
Assume net income for the coming year is p redicted to be $1,634 and dividends are forecasted to be $657. After careful analysis, you determine asset needs for next year are $48,824 and liabilities are expected to be $12,869.
Explain what is his or her minimum required rate of return - A foreign investor placing money in dollar denominated assets desires a 4% real rate of return.
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