The initial installed cost for a new piece of equipment is $10,000. After the equipment has been in use for 4 years, it is sold for $7,000. The company that originally owned the equipment employs a straight-line method for determining depreciation co..
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Reynolds Corporation plans to purchase equipment at a cost of $3 million. The company's tax-rate is 30 percent and the equipment's depreciation would be $600,000 per year for 5 years. If the company leased the asset on a 5-year lease, the payment wou..
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Consider the following cash flows: Year Cash Flow 0 –$ 34,000 1 15,100 2 16,600 3 12,500 Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$37,500,000 1 56,500,000 2 –12,500,000
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Roxanne invested $230,000 in a new business 9 years ago. The business was expected to bring in $2,000 each month for the next 18 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 9% with month..
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Erik, Inc. and James, Inc. have debt-total asset ratios of 60 percent and 40 percent and returns on total assets of 20 percent and 30 percent, respectively. Erik has a greater return on equity?explain your reason.
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Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. 30% chance of Net Income being $4,600; 45% chance of Net Income being $7,800 and 25% chance of Net Income being $13,500. What is the expec..
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Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 8%. The company’s weighted average cost of c..
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On Becca’s 1st birthday, a savings account was opened for her containing $10,000. By her 5th birthday, the account had grown to $13,500 and $1000 was added. By her 13th birthday the account had grown to $17,000 and $2000 was added. Use the time-weigh..
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Fighting Dyer inc. had taxable income of 19.6 million. Calculate the federal income tax by using the corporate tax rate structure 15% $0-;$50,000 25% $50,001-$75,000 34% $75,001-;$10,000,000 35% over $10,000,000 Total tax due is?
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Nutech Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows?
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Evaluate the performance of a company using various financial analytical tools and analyse different patterns of cost behaviour and apply cost-volume-profit analysis to business decisions.
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Find the 3-year implied forward rate one year and two years from now (the expected 3-year spot rate starting one year from now and two years from now). State the final answers as an annual rate.
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