What is the after-tax salvage value

Assignment Help Financial Management
Reference no: EM13928233

Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 34 percent and a discount rate of 12 percent. If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax salvage value?

Reference no: EM13928233

Questions Cloud

Discussion and analysis of condition and results : You should also read Item #7 - "Management's Discussion and Analysis of Condition and Results of Operations" (pgs. 19 - 46) in the company's 10K Form (2011) to complete this assignment.
Which of the given alternative should be chosen : BC Minerals's weighted cost of capital is 12 percent. Using the equivalent annual annuity method, which alternative should be chosen?
Measure of central tendency that divides a population : The relative frequency for a class is the frequency of the class divided by the number of classes. FALSE We divide by the total frequency or total number of items not by number of classes.
Bas proposed two types of payment plans : Skiffertons , an investment banking firm bas proposed two types of payment plans for the IPO being considered by Dakota Drilling, a manufacturer of oil drilling equipment. The first is a firm commitment of E5,000,OOO.
What is the after-tax salvage value : Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category...
Find the unit vector perpendicular to each : Find the unit vector perpendicular to each of a= 6i+2j+3k and b=3i-6j-2k
Which cooling unit should be purchased and why : Germania Corporation is considering replacing its plant cooling unit. The existing unit has recently "died" and has no salvage value. The marginal cost of capital is 19 percent. Which cooling unit should be purchased? Why?
Annual return mean and standard deviation : Your portfolio allocates equal funds to the DW Co. and Woodpecker, Inc. DW Co. stock has an annual return mean and standard deviation of 15 percent and 38 percent, respectively. Woodpecker, Inc., stock has an annual return mean and standard deviation..
Define the importance of innovation to assuring success : Opportunity: Describe the problem that will be solved, or the opportunity that will be realized, through the innovation you will be developing in this class. Ensuring Success: Define the importance of innovation to assuring success for you persona..

Reviews

Write a Review

Financial Management Questions & Answers

  What was the average nominal risk-free rate of return

Assume large-company stocks returned 12.8 percent on average over the past 75 years. The risk premium on these stocks was 7.9 percent and the inflation rate was 3.6 percent. What was the average nominal risk-free rate of return for those 75 years?

  What is UBIs weighted average cost of capital

Union Brick Inc. (UBI) has a total market value of $200 million, consisting of 2 million shares of common stock selling for $50 per share and $100 million of 10 percent perpetual bonds currently selling at par. UBI pays out all earnings as dividends,..

  Stock market price is often based investors perceived risk

In November 2006, Citi groups stock (NYSE:C) was trading at $49.59. Following the credit crisis on 2007-2008 and by at the end of October 2009, Citigroup stock price has plummeted to $4,27 Several banks went under, and the other saw their stock price..

  What does this suggest about financial leverage

Bank L operates with equity to asset ratio of 6 percent, while Bank S operates with a similar ratio of 10 percent. Calculate the equity multiplier for each bank and the corresponding return on equity if each bank earns 1.5 percent on assets. Suppose,..

  Positive correlation between risk and return

Over the past 84 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of annual returns. This observation supports the notion that there is a positive correlation between r..

  What is the value of the business today

Roxanne invested $230,000 in a new business 9 years ago. The business was expected to bring in $2,000 each month for the next 18 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 9% with month..

  When firm holds cash in excess of some necessary minimum

When a firm holds cash in excess of some necessary minimum, it incurs an opportunity cost. The opportunity cost of excess cash (held in currency or bank deposits) is the interest income that could be earned by the next best use, such as investment in..

  When evaluating the expansion option-initial cost of project

Wilbert's, Inc. paid $90,000, in cash, for a piece of equipment three years ago. Last year, the company spent $10,000 to update the equipment with the latest technology. When evaluating the expansion option, what value, if any, should Wilbert's assig..

  Explain how the hedge should work

In each of the following cases, conduct the analysis for Step 1 and Step 2 (page 339 in this chapter) in evaluating a hedge. Specifically assess cash market risk and determine whether the bank should buy or sell financial futures as a hedge. Explain ..

  What is the growth rate on the dividend

In 2010, stock XYZ pays $0.60 per share quarterly dividend. The dividend was $0.50 per share in 2006. What is the growth rate on the dividend, assuming constant growth? Find the beta for the stock, and the current interest rate on a 6-month Treasury ..

  Fund the seminar at the same level into infinity

A foundation supports an annual seminar on campus by using the earnings of a $50,000 gift. It is felt that 10% interest will be realized for 10 years, but that plans should be made to anticipate an interest rate of 6% after that time. What uniform an..

  Non constant growth valuation

A company currently pays a dividend of $4 per share (D0 = $4). It is estimated that the company's dividend will grow at a rate of 21% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 0.9, the ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd