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Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a bank at 15% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $25,000 per year to maintain the system but will save $55,000 per year through increased efficiencies. Galvanized Products uses a MARR of 18%/year to evaluate investments. A) What is the present worth of this investment? B) What is the decision rule for judging the attractiveness of investments based on present worth? C) Should the new computer system be purchased?
What are the portfolio weights for a portfolio that has 122 shares of Stock A that sell for $32 per share and 102 shares of Stock B that sell for $22 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g.,..
Jessica's Boutique has cash of $50, accounts receivable of $60, accounts payable of $400, and inventory of $100. What is the value of the quick ratio? A firm has net working capital of $600, net fixed assets of $2,400, sales of $8,000, and current li..
A stock has an annual return of 11 percent and a standard deviation of 44 percent. What is the smallest expected loss over the next year with a probability of 1 percent?
Based on economists’ forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 1.50% E(2r1) = 2.40% L2 = 0.06% E(3r1) = 2.80% L3 = 0.08% E(4r1) = 3.25% L4 = 0.13% Using the l..
A report from the marketing department indicates that a new product will generate the following revenue stream: $62,500 in the first year, $89,400 in year two, $136,200 in year three, $128,300 in year four, and $112,000 in year five. If your firm's d..
Carlton Industries is considering a new project that they plan to price at $74.00 per unit. The variable costs are estimated at $39.22 per unit and total fixed costs are estimated at $12,085. The initial investment required is $8,000 and the project ..
ART has come out with a new and improved product. As a result, the firm projects an ROE of 30%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3.0 per share. Investors expect a 16% rate of return on the stock. What pri..
What is the difference between tax deductions and tax credits? Which one is more beneficial in reducing a tax payer's tax liability?
Assume NEWC has an investment opportunity (similar to the air bag opportunity in Other People's Money).The firm can spend $325 million on refurbishing its wire and cable plant to develop a product that will be sold in packets or units of twenty. Assu..
You are evaluating two different silicon wafer milling machines. The Techron I costs $261,000, has a three-year life, and has pretax operating costs of $70,000 per year. The Techron II costs $455,000, has a five-year life, and has pretax operating co..
Christopher Electronics bought new machinery for $5,120,000 million. This is expected to result in additional cash flows of $1,200,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years.
You have been made treasurer for a day at AIMCO, Inc. AIMCO develops technology for video conferencing. A manager of the satellite division has asked you to authorize a capital expenditure in the amount of $10,000. The manager states that this expend..
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