## Find the minimum earnings, Financial Management

Assignment Help:

Milan Corporation is interested in buying a machine that will cost \$50,000, and it will depreciate it on straight-line basis over a 5-year period. The machine is expected to last for 7 years and then Milan will sell it for \$5,000. The expected earnings before taxes from the machine is \$15,000 with a standard deviation of \$5,000. The income tax rate of Milan is 35%, and it uses 10% as discount rate.

(A) Find the minimum earnings before taxes that this machine should generate annually to justify its purchase.

(B) Find the probability that this machine will be profitable.

#### What is marginal cost of capital, What is Marginal cost of capital Marg...

What is Marginal cost of capital Marginal cost of capital, by contrast refers to incrementalcost associated with new funds raised by firm. Marginal cost is the specific conc

#### Calculate the cumulative probability , Compound options are usually cheaper...

Compound options are usually cheaper than vanilla options and we know that there are four main types of compound options: a call on a call; a put on a call; a call on a put; a put

#### LP Problem, Max Z = 107x1+x2+2x3 Subject to 14x1+x2-6x3+3x4=7 16x1+x2-6x3...

Max Z = 107x1+x2+2x3 Subject to 14x1+x2-6x3+3x4=7 16x1+x2-6x3 3x1-x2-x3 x1,x2,x3,x4 >=0

The zero-volatility spread is a measure of the spread that the investor would realize over the entire Treasury spot rate curve if a mortgage-backed or asset-backe

#### Callable bonds, Basics of  Callable Bonds A callable b...

Basics of  Callable Bonds A callable bond is a convertible bond with the favorable feature of call option available to the issuer. When the fir

#### What are the financing methods, Q. What are the financing methods? - Th...

Q. What are the financing methods? - The export transaction could be correlated to a bill of exchange. If this bill was established (guaranteed) by the bank it could be discoun

#### Trouble in determination of cost of capital, Q. Trouble in Determination of...

Q. Trouble in Determination of Cost of Capital? Trouble in Determination of Cost of Capital:- 1. Historic Cost as well as Future Cost: - One main problem in the determinatio

#### the use of a preauthorized check system, In general, what type of firm wou...

In general, what type of firm would benefit from the use of a preauthorized check system and what specific types of companies have successfully used this device to accelerate cash

#### Working capital managment, working capital management?

working capital management?

#### External credit enhancement, It is in the form of third-party g...

It is in the form of third-party guarantees which protect against losses up to a particular fixed level. This is available in the form of a corp