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The Campbell Company is considering adding a robotic paint sprayer to its production line. Ths sprayer's base price is $930,000, and it would cost another $16,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81% and 7.41%), and it would be sold after 3 years for $699,000. The machine would require an increase in net working capital (inventory) of $8,000. The sprayer would not change revenues , but it is expected to save the firm $358,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%. what is the year zero net cash flow? what are the operating cash flows in years 1, 2, AND 3? (ROUND TO THE NEAREST DOLLAR) What is the additional year 3 cash flow? If the projects cost of capital is 15%, what is the NPV of the Project?
What is the annuity worth in terms of a single equivalent amount of? today's dollars?
Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project...
It is May 1, and the quoted price of a bond with an Actual/365 day count and 8% per annum coupon in the United States is 104. It has a face value of 100 and pays coupons on April 1 and October 1. What is the cash price rounded to the nearest whole nu..
Each party invests its capital at the beginning of the first year and cash flow for operations (NOI) is projected as follows:
Suppose the board of a company decides to invest $250 million of cash in 1 year government bills yielding 4% and use the proceeds from the sale of the bills to pay a higher dividend next year. What would be the company's share price in this case? Com..
Union Pacific is considering issuing commercial paper and would like to know the yield it should offer.
Leon Technology is a firm that specializes in advanced telecommunication software and has been in existence for 4 years. For the current year, the firm reported $ 5 million in after-tax operating income and a book value of equity of $ 25 million. Est..
You purchase 500 shares of 2nd Chance Co. stock on margin at a price of $53. Your broker requires you to deposit $10,000. Suppose you sell the stock at a price of $44. What is your return? What would your return have been had you purchased the stock ..
A bond issued by company ABC has 7% coupon, 10 years to maturity, and is currently priced at $1010. What is the bond’s yield? (show the steps and calculations you did) Find the coupon payments. Draw the time-line diagram.
Which of the following correctly states the business plan types that contain the lowest and greatest proportions of financial detail?
A zero-coupon bond with a par value of $2,000 matures in 10 years. At what price would this bond provide a yield to maturity that matches the current market rate of 8 percent?
Corner Creation Corp preferred stock pays annual dividend of $3 per share. If the current interest rate is 5%, how much is an investor willing to pay for this preferred stock?
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