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Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply: 1. The machinery falls into the MACRS 3-year class. 2. Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance. 3. The firm's tax rate is 40%. 4. The loan would have an interest rate of 15%. 5. The lease terms call for $400,000 payments at the end of each of the next 4 years. 6. Assume that the company has no use for the machine beyond the expiration of the lease. The machine has an estimated residual value of $250,000 at the end of the 4th year.
What is the NAL of the lease?
Suppose the spot exchange rate for the canadian for the canadian dollar is Can 1.02 and the six month forard rate is Can 1.03.
A Corporation is consturcting its MCC schedule. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60% common equity. Its bonds have a 12% coupon, paid semiannually, a current maturity of twenty years and sell for $1K.
What should the firm set as the required rate of return for the project?
Taussig Technologies Company has been increasing at a rate of 20 percent per year in recent years. This same supernormal growth rate is expected to last for another 2 years.
ow might the bank be able to involve its own customers in designing its web site and pricing its Internet service package?
The new lathe is expected to be sold for $5,000 at the end of the project's ten-year life. What is the project's terminal cash flow?
What is the internal rate of return of this project? 10.87% 11.57% 13.68% 15.13%
Are bank mergers and acquisitions good for the economy? How about the shareholder? What impact will it have on the customer? Do customers gain value, perhaps through economies of scale? Is bigger necessarily better?
Risk as well as return computation using capital asset pricing model and If the market risk premium is 8%, the risk-free rate of return is
What are the major types of foreign exchange risks? How are these risks hedged or mitigated? What benefits do firms gain from hedging activities?
You ask for a quote on the peso at the bank in the airport, and they give you a bid-ask quote of 0.22-0.26 USD/ARS. How many USD will you be able to recover if you trade with this bank?
What interest rate, compounded annually, does this represent?
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