### What is the free-cash flow for the machine in year one

Assignment Help Financial Management
##### Reference no: EM131360778

You company is deciding whether to keep an existing machine or replace the machine with a newer model. If the firm buys the new machine, the following information applies.

The cost to purchase the new machine is \$3635.

The sales revenue is \$5759 per year for 4 years, starting in year 1.

The cost, except depreciation, is \$1214 per year for 4 years, starting in year 1.

The new machine is depreciated using an accelerated depreciation schedule of year 1 = 33%, year 2 = 45%, year 3 = 15% and year 4 7%.

If the firm buys the new machine it will sell the old machine for an after-tax salvage value of \$547

The tax rate is 38%.

What is the free-cash flow for the machine in year 1?

#### Questions Cloud

 The yield on the bond declines : You have an obligation to pay \$1,488 in four years and 2 months. In which bond would you invest your \$1,000 to accumulate this amount, with relative certainty, even if the yield on the bond declines to 9.5% immediately after you purchase the bond? What is the percentage change in the bond price : A 9-year bond has a yield of 13.5% and a duration of 8.63 years. If the MARKET yield changes by 60 basis points, what is the percentage change in the bond’s price? Is this an increase or decrease? What is paper express market value per share : Paper Express Company has a balance sheet which lists \$85 million in assets, \$40 million in liabilities, and \$45 million in common shareholders' equity. It has 1,400,000 common shares outstanding. The replacement cost of the assets is \$115 million. T.. Operating leverage based on the estimate of fixed costs : Your business plan for your proposed start-up firm envisions first-year revenues of \$360,000, fixed costs of \$120,000, and variable costs equal to one-third of revenue. What are expected profits based on these expectations? What is the degree of oper.. What is the free-cash flow for the machine in year one : You company is deciding whether to keep an existing machine or replace the machine with a newer model. If the firm buys the new machine, the following information applies. What is the free-cash flow for the machine in year 1? What is expected price of stock three years from now : The required rate of return is 21.90 percent. Ninex Corp. has just paid a dividend of \$3.12 and is expected to increase its dividend at a constant rate of 8.75 percent. What is the expected price of the stock three years from now? What will happen to company price-earnings ratio : Computer stocks currently provide an expected rate of return of 23%. MBI, a large computer company, will pay a year-end dividend of \$3.40 per share.  If dividend growth forecasts for MBI are revised downward to 10% per year, what will happen to the p.. What price do you expect mf shares to sell for in five years : MF Corp. has an ROE of 18% and a plowback ratio of 55%. The market capitalization rate is 15%. If the coming year's earnings are expected to be \$2.90 per share, at what price will the stock sell? What price do you expect MF shares to sell for in 5 ye.. Consider the various types of jobs in mpbs : Consider the various types of jobs in MPBS and the variety of talent or job qualifications that are needed throughout the MPBS organization. Consider the differences between job-based, skill-based and competency-based approaches to creating busin..

### Write a Review

#### What is present value of the savings

Your company will generate \$72,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.50 percent, what is the present value of the savings?

#### What is the dividend yield and expected capital gains yield

The next dividend payment by Wyatt, Inc., will be \$3.20 per share. The dividends are anticipated to maintain a growth rate of 6.75 percent, forever. Assume the stock currently sells for \$50.00 per share. What is the dividend yield? What is the expect..

#### Find the profits for the possible stock prices on august 1

Use the spreadsheet to find the profits for the possible stock prices on August 1. Generate a graph and use it to estimate the breakeven stock price at the end of the holding period.

#### Can panama issue a bond denominated in dollars at the same

Can Panama issue a bond denominated in dollars at the same terms (that is, at the same yield) as the U.S. government? Why or why not?

#### What is the fair price of given invesment

An investment pays \$500 per year for the first 4 years, \$400 per year for the next 3 years, and \$700 per year the following 8 years. - If the discount rate if 10% compounding quarterly, what is the fair price of this invesment?

#### Compute the cost of capital for the individual components

Valvano Publishing Company is trying to calculate its cost of capital for use in a capital budgeting decision. Mr. Washburn, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost..

#### The annual sales figure when evaluating this project

Winnebagel Corp. currently sells 24,000 motor homes per year at \$62,000 each, and 9,000 luxury motor coaches per year at \$99,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 19,000 of these..

#### Prepare a financial analysis of warehouse distribution

Develop a PowerPoint presentation that answers the following questions: Prepare a financial analysis of Warehouse Distribution, Inc.(I will upload the income statements for Warehouse Distribution), comparing the firm’s financial performance between t..

#### What are total stockholders equity

Jack and Jill Corporation's year-end 2009 balance sheet lists current assets of \$250,000, fixed assets of \$800,000, current liabilities of \$195,000, and long-term debt of \$300,000. What is Jack and Jill's total stockholders' equity?

#### What is the smallest expected loss over the next year

A stock has an annual return of 12 percent and a standard deviation of 31 percent. What is the smallest expected loss over the next year with a probability of 5 percent?

#### What is the expected return e of the portfolio

Assume you have the following three-asset portfolio with the following characteristics: What is percentage of your portfolio is invested in Stocks A, B, and C respectively? What is the expected return E(Rp) of the portfolio?

#### How can you increase the sharpe ratio of a portfolio

How can you increase the Sharpe ratio of a portfolio? What type of stocks would you have to add to it in order to do so?