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The Minot Kit Aircraft Company of Minot, North Dakota, uses a plasma cutter to fabricate metal aircraft parts for its plane kits. The company currently is using a cutter that it purchased used four years ago that has a book value of $70,000 and is being depreciated $17,500 per year over the next four years. If the old cutter were to be sold today, the company estimates that it would bring in an amount equal to the book value of the equipment. The company is considering the purchase of a new automated plasma cutter that would cost $440,000 to install and that would be depreciated over the next four years toward a $44,000 salvage value using straight-line depreciation. The primary advantage of the new cutter is the fact that it is fully automated and can be run by one operator rather than the three employees currently required. The labor savings would be $70,000 per year. The firm faces an income tax rate of 26%. At the en of the 4-year project both cutters will be sold at their of the project value. a. What are the differential operating cash flow savings per year during Years 1 through 4 for the new plasma cutter? b. What is the initial cash outlay required to replace the existing plasma cutter with the newer model? c. If the company requires a discount rate of 8% for new investments, should the fleet be replaced?
Nelson purchased 1,300 shares of stock for $12.75 a share. The initial margin requirement is 70% and the maintenance margin is 40%.
Your company has debt worth $200,000, with a yield of 9%, and equity worth $300,000. It is growing at a 5% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12 percent.
Assume that they will not be able to maintain the profit margin, how would that affect your capital budgeting analysis?
1. what factors caused the global financial crisis? describe three factors in detail. you need to reference at least 2
how have money market rates changes since the beginning of the year? consider the existing economic conditions. do you
The current yield to maturity on similar bonds is 12 percent. Compute the new price of the bond and comment on whether you think it is overpriced in the market place.
Find the coordinates of all extreme (corner) points of the FR. (c) Solve the LP obtained in (a) by using Extreme Point Theorem. How many optimal solutions does the LPP have?
How would you explain strategic planning? What are the differences between strategic and financial planning? What financial problems may an organization face when implementing their strategic plan?
A company is 30% financed by risk-free debt. The interest rate is 8%, the expected market risk premium is 6%, and the beta of the company's common stock is 0.69.
You purchased a stock for 47.10, over course of a yr you got $2.40 per share in dividends and inflation avged 3.4 percent. Today you sold your shares for 49.50 a share. What is your aproxx real rate of return on this investment?
If the required return is 12 percent and the company just paid a $2.50 dividend. what is the current share price?
elle mae industries has a cash balance of 50000 accounts payable of 150000 inventory of 190000 accounts receivable of
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