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A firm is trying to determine whether to replace an existing asset. The proposed asset has a purchase price of $50,000 and has installation costs of $3,000. The asset will be depreciated over its five year life using the straight-line method. The new asset is expected to increase sales by $17,000 and non-depreciation expenses by $2000 annually over the life of the asset. Due to the increase in sales, the firm expects an increase in working capital during the asset's life of $1,500, and the firm expects to be able to sell the asset for $6,000 at the end of its life. The existing asset was originally purchased three years ago for $25,000, has a remaing life of five years, and is being depreciated using the straight-line method. The expected salvage value at the end of the asset's life (i.e., five years from now) is $5000; however, the current sale price of the existing asset is $20,000, and its current book value if $15625. The firm's marginal tax rate is 34 percent and its required rate of return is 12%. What is the net incremental tax cash flow?
a. 13,504b. 13,761.50c. 14,824d. 12,441.50
Examine your personal expenses on a variable and fixed basis. Determine some of your personal fixed costs and variable costs? What could cause them to change?
Determine the NPV for both projects using a cost of capital of 13% 2. Determine the NPV for both projects using a cost of capital of 8% 3. At an 8% discount rate, which project should be accepted? at 13% discount rate, which project should be acce..
For example if someone purchases for $21,000 and will receive $2,000 per year for 20 years what will their return be?
The three months risk-free interest rate (with continuous compounding) is 5%. What to the nearest cent is the value of the short forward contract?
Lear, Corporation, has $800,000 in current assets, $350,000 of which are permanent current assets. In addition, the firm has $600,000 invested in fixed assets.
The Cookie Shoppe expects sales of $437,500 next year. The profit margin is 5.3 percent and the firm has a 30 percent dividend payout ratio. What is the projected increase in retained earnings?
You are in the role of a chief operating officer for a for-profit insurance company. A board of directors has requested that you prepare a summary of the issues involved in a potential reduction in U. S. medical insurance reimbursement of 40%...
Rockne, Inc., has outstanding bonds that will mature in six years and pay an 8 percent coupon semiannually. If you paid $993.46 today and your required rate of return was 7.47 percent.
Find out excess return each year should the actively managed fund earn to overcome higher fees.
Suppose a U.S. government bond will pay $1,000 four years from now. If the going interest rate on 4-year government bonds is 4.5%, how much is the bond worth today?
Rihana is a financial analyst in Bidget Corp. As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following calculations and observations.
A futures contract covers 5000 pounds with a minimum price change of $0.01 is sold for $31.60 per pound. If the initial margin is $2,525 and the maintenance margin is $1,000, at what price would there be a margin call?
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