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1. Today, Gomi Waste Disposal purchased a piece of equipment for 210,000 dollars that will be depreciated to 90,000 dollars over 8 years using straight-line depreciation. What would the after-tax cash flow be from the equipment sale if the equipment is sold in 9 years for 110,000 dollars and the tax rate is 10 percent?
2. Middlefield Motors is evaluating project Z. The project would require an initial investment of 57,500 dollars that would be depreciated to 6,500 dollars over 7 years using straight-line depreciation. The first annual operating cash flow of 24,000 dollars is expected in 1 year, and annual operating cash flows of 24,000 dollars are expected each year forever. Middlefield Motors expects the project to have an after-tax terminal value of 306,500 dollars in 3 years. The tax rate is 30 percent. What is (X+Y)/Z if X is the project’s relevant expected cash flow in year 3, Y is the project’s relevant expected cash flow in year 4, and Z is the project’s relevant expected cash flow in year 2? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).
Assume that banks must hold a 2 percent reserve percentage against transaction account balances up to and including $40 million. For transaction accounts above $40 million, the required reserve percentage is 8 percent. Also assume the Dell National B..
Your rich uncle has just given you a high school graduation present of $1,200,000. The present, however, is in the form of a 25-year bond with an annual interest rate of 2.2% compounded annually. The bond says that it will be worth $1,200,000 in 25 y..
Jennifer presents a business plan to her? bank's loan officer that predicts net cash flows for the first three years of? $10,000, $15,000, and? $8,000 respectively. If these cash flows occur at the end of each year and the discount rate is? 4%, what ..
What would it imply if empirical studies showed that the lower bounds and put-call parity relationship does not hold in the equity and option markets?
A firm is considering purchasing an asset that will have a useful life of 10 years and cost $5 million; it will have installation costs of $500,000 and a salvage or residual value of $500,000. What is the annual straight-line depreciation for this..
Explain the difference between Interest Rate Parity (IRP), Purchasing Power Parity (PPP) and International Fischer Effect (IFE).
A bond has a 10% coupon and a yield to maturity (YTM) of 8%. If the YTM remains constant, in one year will be the bond’s price be higher, lower, or unchanged?
Axel Rose Inc. (ARI) has a 15 year, 12% semi-annual coupon bond that is currently selling for $1,153.72. ARI’s current stock price is $25.00 and the company expects its next dividend to be $2.50 with a constant growth rate of 5%. Calculate the costs ..
What was the level of retained earnings on the company's December 31, 2008 balance sheet?
Wendel invests 5000 dollars in a mutual fund on January 1. What is Wendel's time-weighted rate of return?
A silver futures contract requires the seller to deliver 5,000 Troy ounces of silver. Jerry Harris sells one July silver contract at a price of $21 per ounce, posting a $5,500 initial margin. If the required maintenance margin is $3,500, what is the ..
Companies a and b have been offered the following rates per annum on a $100 million 5 year loan. Company A requires a floating rate loan; company b requires a fixed rate loan. design a swap that will appear equally attractive to both companies.
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