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MJW Corporation (US) is a manufacturer of electronics. During the last five years, the cost of raw materials and labor, have continued to rise in the firm's US manufacturing facility. As a result, the CEO of MJW Corp. is considering establishing a new manufacturing subsidiary overseas to take advantage of lower production costs elsewhere. Investment advisors to the CEO have suggested Mexico and Thailand as two possible locations.Below is the summary of the subsidiary's expected pre-tax cash flows for the first five years in each location. Even though most operating cash flows will be in pesos or bahts, the company anticipates some US dollar denominated expenses. ETC Mexico In Millions??2012??2013??2014??2015??2016MP cash inflows???7500??11000??12500??13800MP cash outflows?18000??1500?? 1900?? 1700?? 1600US $ cash outflows???? 200?? 150?? 125?? 75 ETC Thailand In Millions??2012??2013??2014??2015??2016TB cash inflows????28000??24500??26000??28800TB cash outflows?60000?? 2000?? 2200?? 1900?? 3000US $ cash outflows??? 125?? 175?? 200?? none Additional Information:Exchange rates for 2012 are:?1 Mexican Peso(MP)=US$.08 (i.e $1=12.5 MP)1 Thai baht (TB)= US$.032 (or $1=31.25TB).It is expected that the Mexican Peso will strengthen against the US dollar at 4 percent per year. and the Thai baht will weaken at the rate of 3 percent per year against the dollar. MJW Corporation's weighted average cost of capital for both projects is 6 percent. Mexican income tax rates are 15%, whereas income tax rates in Thailand are 10%. No monies will be repatriated back to the US. . Determine the net present value of both projects. Round PV factor to 4 decimal places.. If you were MJW Corporation's investment advisor, which location would you choose for the new subsidiary? Why?
If the bonds bear interest at 12%, which is paid semiannually on January 1 and July 1, what is the total cost to be debited to the investment account?
Par Four Issues $1,700,000 of 10%, 10-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,505,001.
Assume that the County of Katerah maintains its books and records in a manner that facilitates preparation of the fund financial statements. Prepare the necessary entries for the current fiscal year.
Mary (Who is single with no dependants and who does not itemize) owns 100% of Beezer Tweezer Co, which is organized as a C-Corporation. Beezer Tweezer has $400,000 of taxable income in 2011 and Mary has $34,500 of outside taxable income before any..
The measurement date for shares issued to employees in share option plans accounted for using the fair-value method is:
Mathews Bus Service traded in a used bus for a new one. The original cost of the old bus was $52,000. Accumulated depreciation at the time of the trade-in amounted to $34,000. The new bus cost $65,000, but Mathews was given a trade-in allowance of..
Patrice sells a parcel of land for $50,000 cash and the buyer assumes Patrice's liability of $7,000 on the land. Patrice's basis in the land is $40,000. What is the gain or loss she will recognize on the sale?
During the past year a company had total fixed costs of $70,000. Its product sold for $9 per unit. Variable costs during this time equaled $5 per unit.
Compute depreciation for 2011 and 2012 and the book value of the drill press at December 31, 2011 and 2012, assuming the straight-line method is used.
Explain the goals of financial management. The description must include how earnings are valued, how shareholder wealth can be maximized, and how management decisions affect stockholder wealth.
The mcDaniel company s financing plans for next year include the sale of long term bonds with a 10% coupon. The company believes it can sell the bonds at a price that will provide a yield to maturity of 12%. If the marginal tax rate is 34%, what i..
On March 15, 2010, Frankel Construction contracted to build a shopping center at a contract price of $120 million.
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