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ABC Company is considering a new investment that will cost 50,000 to produce a new product that the president of the company has invented. The marketing dept of the company anticipates the new cash flows from the investment will be 10,000, 12,000, 12,000 12,000 and 10,000. The newly elected President of the United States has reinstituted the old investment tax incentive for a corporation which gives an investment tax credit of 10% of the cost of an investment applicable in the second year after implementation of the investment. It will cost the company 2000 to install the new equipment in the factor to get it going. The operations officer engineer thinks that the residual value of the equipment will be 10000. That maintenance costs will be 1000 in years 2 and 4 only. The corporate controller says that the accounting department has been using DDB appreciation for all new equipment. Assuming the company can sell bonds at 10% to pay for this investment, is this a good investment for the company? Whether or not, what is the IRR of the new investment?
A foundry uses 3,600 tons of pig iron per year at a constant rate. The cost per ton delivered to the foundry is $145. It costs $92 to place an order and $18 per ton per year for storage. Find the minimum-cost purchase quantity.
A 5 year girl was given a lottery ticket for her recent birthday. The ticket was the grand prize winner and is suppose to pay $80,000 per year after taxes, for 20 years. The state sued, however, and won the case arguing that it would pay the prize as..
paper on future generation telecommunication technology technology that is extending the functionality and lowering the
Jordan and Taylor want to purchase a new 60 quart floor mixer for $12,000. This machine would have a 5 year life with a salvage value of $2,000. The new machine would decrease operating costs by $1,000 each year of its economic life. What is the payb..
Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.)
Describe the axioms of utility, what is the expected utility of wealth from taking the gamble and what is the Certainty Equivalent Wealth?
LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 12%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 30%, what is LL's after-tax cost of debt?..
What general problems must be addressed in doing ratio analysis for government financial condition analysis? Do traditional solvency ratios adequately address financial condition analysis concerns? Provide your responses supported by text and other r..
Fullerton Wine Company is a retailer which sells vintage wines. The company has established a policy of reordering inventory every 30 days.
Jane Smith currently holds tax-exempt bonds of Good Samaritan Healthcare that pay 7 percent interest. She is in the 40 percent tax bracket. Her broker wants her to buy some Beverly Enterprises taxable bonds that will be issued next week. With all els..
The Strik-it-Rich Gold Mining Company is contemplating expanding its operations. To do so it will need to purchase land that its geologists believe is rich in gold. Strik-it-Rich’s management believes that the expansion will allow it to mine and sell..
Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza?
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