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Alex placed in service two assets in 2015: equipment (7 year property) in August 2015 which cost $1,400,000, and computer equipment (5 year property) in November 2015 which cost $2,000,000. These were his only asset acquisitions this year. Alex wants to take the maximum depreciation deduction this year.
1. What is the amount of cost recovery (depreciation) he can take in 2015 on the Equipment?
2. What is the amount of cost recovery (depreciation) he can take in 2016 on the Equipment?
3. What is the amount of cost recovery (depreciation) he can take in 2015 on the Computer Equipment?
4. What is the amount of cost recovery (depreciation) he can take in 2016 on the Computer Equipment?
Ford expects to earn a free cash flow of $100, starting in 1 year, forever. The discount rate on the assets of the firm is 18%. Further, Ford has issued debt of $1,000 at an interest rate and yield-to-maturity of 5%. Ford will perpetually roll this $..
Sun Lee’s is considering two mutually exclusive projects that have been assigned the same discount rate of 10.5 percent. Project A has an initial cost of $54,500, and should produce cash inflows of $16,400, $28,900, and $31,700 for Years 1 to 3, resp..
Compare the expected stock returns to the actual annual returns for each year and determine if the stock was mispriced.
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Assume that a bond with five years to maturity, a par value of $1,000, and a $60 annual coupon payment costs $1,100 today. - What is the coupon rate?
Provide an example of how a company may change its processes to make its manufacturing more efficient or environmentally sustainable. How will the company benefit? Justify why you think this production process would dictate the use of a process costi..
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An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $8,900,000 and will be sold for $1,930,000 at the end of the project. Required: If the tax rate is 30 percent..
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