A firm purchased $62,800 of fixed assets two years ago. The company no longer needs these assets so it is going to sell them today for $28,500. The assets are classified as five-year property for MACRS. The MACRS rates are .2, .32, .192, .1152, .1152, .0576, for Years 1 to 6, respectively. What is the net cash flow from this sale if the firm's tax rate is 23 percent and no bonus depreciation is taken?
Q: Baghiben
A: The objective of the question is to calculate the interest owed for the month of September based on…
Q: Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow -$ 28,000…
A: Modified Internal Rate of Return (MIRR) gives the percentage of return from the series of cash…
Q: FUTURE VALUE: ANNUITY VERSUS ANNUITY DUE: What's the future value of a 5%, 5-year ordinary annuity…
A: PMT = $800 I = 5% = 0.05 N = 5 years We have the formula: FVA N = PMT × ( (( 1 + I )^N )-1)/I FVA…
Q: Stocks A and B are trading at $100 and $105 respectively. Stock A has a volatility of 0.4 and stock…
A: After 1 year both stocks will have an up price or down price. We have to compare the prices in both…
Q: Give answer with explanation and provide correct and incorrect option explanation
A: NPV is - $ 5,320/.Explanation:
Q: Coupon payments are fixed, but the percentage return that investors receive varies based on market…
A: The objective of the question is to identify the correct assumption under which the Yield to…
Q: observed the following ars: 4 percent, −10 percent, 23 percent, 18 percent, and 12 percent. The…
A: Average rate of return is used in stock market to measure the return over the period of time.
Q: Problem #2: A bond has a face value (and redemption value) of $504,000, and pays coupons annually.…
A: Variables in the question:Face value and redemption value=$504000Effective annual yield=3 * Coupon…
Q: A new transmission in your truck will cost $9500. Luckily it should reduce maintenance expense by $…
A: Net Present Value (NPV) is the present value of cash inflows minus the initial investment. If NPV of…
Q: Required information Exercise 9-21 (Algo) Calculate the issue price of bonds (LO9-7) [The following…
A: Par value = $39,400,000Coupon rate = 9%Market rate = 8%Years to maturity = 20 yearsCompounding…
Q: An ordinary annuity selling at $8,860.53 today promises to make equal payments at the end of each…
A: The annual annuity payment (PMT)= $1,065.62Present value= $7,706,517.28 Explanation:Step 1: Find the…
Q: A coupon bond that pays semiannual interest is reported in the Wall Street Journal as having an ask…
A: Bond price refers to an amount that is used by investors for buying the bonds which are issued by…
Q: Credit ratings affect the yields on bonds. Based on the scenario described in the following table,…
A: The objective of the question is to understand how different scenarios affect the yield on bonds and…
Q: Consider the following information State of Probability of Economy State of Economy Rate of Return…
A: Expected return estimates the mean, or anticipated value, of the likelihood of an expected return.…
Q: Free Cash Flow Iron Ore Corporation reported free cash flows for 2022 of $114 million and investment…
A: Free cash flow is the cash flow generated after taking into account:DepreciationCapital expenditure,…
Q: The Michner Corporation is trying to choose between the following two mutually exclusive design…
A: The NPV is the tool or method for evaluating investment proposal where the net discounted benefits…
Q: ABC International has an unlevered cost of capital of 10 %, a tax rate of 35 %, and expected…
A: The cost of equity refers to the rate of return that a company is expected to generate for its…
Q: Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a…
A: Equivalent Annual Cost (EAC) is widely used by businesses to assess the economic feasibility of…
Q: Your firm purchased machinery for $9.3 million and received immediate 100% bonus depreciation. The…
A: Tax rate (T) = 0.21Sale value (S) = $3.8 millionAfter-tax cash flow = ?Since the 100% depreciation…
Q: Although Company A and Company B have similar returns on 口 equity, what is the primary driver for…
A: ROE or return on equity measures a firm's profitability. It assesses the efficiency of a firm in…
Q: eBook Carnes Cosmetics Co.'s stock price is $39, and it recently paid a $2.00 dividend. This…
A: 0.047 or 4.7%.Explanation:To find the constant growth rate (g) of the stock after Year 3, we can use…
Q: How to calculate the value of a bond that matures in 16 years and has a 1,000 par value. The annual…
A: The bond is a long-term fixed-income financial instrument issued by companies to raise funds.The…
Q: Perpetuities are also called annuities with an extended or unlimited life. Based on your…
A: The objective of the question is to understand the characteristics of a perpetuity and calculate the…
Q: Andronicus Corporation (AC) has the following jumbled information about an investment proposal: a.…
A: Net Present Value is a financial measure used to evaluate the profitability of an investment or…
Q: How does the VC method estimate exit values, and what are two standard corporate finance approaches…
A: Venture Capitalist:They do equity investment in start up companies, which has high potential for…
Q: Seabiscuit Industries needs to raise $51.23 million to fund a new project. The company will sell…
A: BOND:A bond is a long-term fixed-income financial instrument issued by the companies to raise…
Q: None
A: For maintaining growth in sales company need to invest in assets and liabilities and keep growing…
Q: The pretax financial income (or loss) figures for Metlock Company are as follows. 2022 $77,000 2023…
A: Account Titles and ExplanationDebitCredit2022:Income Tax Expense15400 Income Tax Payable 15400…
Q: Suppose that there are many stocks in the security market and that the characteristics of stocks A…
A: The risk-free rate is the minimum expected return rate that is considered by an investor from an…
Q: Question 12, P 8-30 (similar to) Part 1 of 6 > HW Sc Poi You are considering the following two…
A: The objective of the question is to evaluate two investment projects using the concepts of Internal…
Q: The Borstal Company has to choose between two machines that do the same job but have different…
A: Capital budgeting is the technique that helps a company to evaluate and select long-term investment…
Q: More risk can be reduced if one holds stocks with greater correlation coefficients of returns. O…
A: Holding stocks with greater correlation coefficients of returns doesn't necessarily reduce risk.…
Q: why are equities regarded as riskier than debentures for investor? a) because they are paid first…
A: The question is asking why equities are considered riskier than debentures from an investor's…
Q: 20 $2500 was borrowed 2-years ago, is to be settled by following payments: $1250 today, $1170 in…
A: Amount Borrowed $ 2,500.00Years passed after borrowing2PaymentsNow $ 1,250.00In 5 months $…
Q: What is the value of all the options combined? Plot your answer.
A: Given Information, Project Value of 200 will increase or decrease by 25% per period two…
Q: Avondale Aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock…
A: Preferred stock is an example of zero-growth stock.This is because the preferred stock has a…
Q: Compute the IRR statistic for Project E. The appropriate cost of capital is 9 percent. (Do not round…
A: Internal Rate of Return (IRR) is the discount rate at which the present value of cash inflows equals…
Q: Please show how to solve this step by step. A house with price of $500,000 Suppose that there is an…
A: If Robert plans to hold the mortgage for the entire 30-year term, choice d (3.875% interest rate…
Q: The following return series comes from Global Financial Data. Large Stocks LT Gov Bonds US T-bills…
A: Average real return refers to the rate on an annual basis after considering the effect of inflation…
Q: Compute the IRR statistic for Project F. The appropriate cost of capital is 13 percent. Note: Do not…
A: IRR refers to the internal rate of return.It is the rate at which net present value for a project is…
Q: Consider a project to supply Detroit with 26,000 tons of machine screws annually for automobile…
A: Step 1: Calculate Revised Operating Cash Flows under Worst-Case and Best Case ScenarioWe will have…
Q: Pauline Found Manufacturing, Inc., is moving to kanbans to support its telephone switching-board…
A: Kanban container size = 75unitsNumber of kanbans = 4 kanbansExplanation:Given:Setup cost (S) =…
Q: hrd.2
A: The objective of the question is to price a derivative that pays the minimum of the two stocks in 1…
Q: Loan Request: $15,000 for 1 year college tuition Capacity Annual household income: $10,000 salary…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: With the growing popularity of casual surf print clothing, two recent MBA graduates decided to…
A: NPV net present value is the capital budgeting technique used to evaluate profitability and…
Q: Jolie has an outstanding order with her stock broker to purchase 1,000 shares of every IPO. The…
A: Winner's curse is a situation where each bidder values the common stock differently. So the winner…
Q: The Reynolds Corporation buys from its suppliers on terms of 3/16, net 60. Reynolds has not been…
A:
Q: FUTURE VALUE: If you deposit $2,000 in a bank account that pays 6% interest annually, how much will…
A: The answer is in the explanation.Explanation:FV = P times (1 + r)^nwhere:- ( FV) is the future value…
Q: Rare Agri-Products Ltd. is considering a new project with a projected life of seven (7) years. The…
A: The answer is in the explanation.Explanation:WACC Calculation:Equity Cost (Ke): We can estimate the…
Q: Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a…
A: The objective of the question is to calculate the unit product cost for one gamelan under both…
Step by step
Solved in 3 steps with 2 images
- Taos Productions bought a piece of equipment for $79,860 that will last for 5 years. The equipment will generate net operating cash flows of $20,000 per year and will have no salvage value at the end of its life. What is the internal rate of return?Beyer Company is considering the purchase of an asset for $240,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Net cash flows Year 0 1 2 3 4 5 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.) $ Cash Inflow (Outflow) (240,000) Year 1 $60,000 Payback period = Year 2 $36,000 Cumulative Net Cash Inflow (Outflow) Year 3 $60,000Suppose an asset has a purchase cost of $15,000, a life of five years, a salvage value of $3,000 at the end of five years, and a net annual before-tax revenue of $7,500. The firm's marginal tax rate is 35%. The asset will be depreciated by five-year MACRS.(a) Determine the cash flow after taxes, assuming that the purchase cost will be entirely financed by the equity funds.(b) Rework part (a), assuming that the entire investment would be financed by a bank loan at an interest rate of 9%.(c) Given a choice between paying the purchase cost up front from the firm's equity and using the financing method of part (b), show calculations to justify which is the better choice at an interest rate of 9%.
- The Grace Company purchased equipment for $14,000 on January 1, 2022 and estimates that it will increase net cash flows by the following amounts Year 1 $5,800 Year 2 4,200 Year 3 3,100 Year 4 1,900 Year 5 800 At the end of that time the equipment will be worthless. Assuming an interest rate of three percent, what is the NPV for the equipment? Use time value of money factors with at least four decimal places and then round your final answer to the nearest whole dollar.Beyer Company's is considering the purchase of an asset for $205,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on invetsments. (PV of $1, FV of $1, PVA of $1, and FVA of $1. Net cash flows (Year 1 $70,000, Year 2 $50,000. Year 3 $88,000, Year 4 $159,000 and Year 5 $53,000. A. Compute the net present value of this investment B. Should Beyer accept the investment?Suppose an asset has a first cost of $8,000,a life of five years, a salvage value of $2,000 atthe end of five years, and a net annual before-taxrevenue of $2,500. The firm’s marginal tax rate is35%. The asset will be depreciated by three-yearMACRS.(a) Using the generalized cash flow approach, determine the cash flow after taxes.(b) Rework part (a), assuming that the entire investment would be financed by a bank loan at aninterest rate of 9%.(c) Given a choice between the financing methodsof parts (a) and (b), show calculations to justifyyour choice of which is the better one at an interest rate of 9%.
- Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 10% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 60,000 $ 40,000 $ 70,000 $ 125,000 $ 35,000 $ 330,000 a. Compute the net present value of this investment. (Round your answers to the nearest whole dollar.) b. Should Beyer accept the investment? Yes NoWhat is the answer in the following question and it's cash flow diagram? a.) The purchased price of the equipment is P12,000 and its estimated maintenance costs are P500 for the first year, P1,500 for the second year, and P2,500 for the third year. After three years of use the equipment is replaced, it has no salvage value. Compute the present equivalent cost of the equipment using 10% interest. (capitalized cost)Berry Products is considering two pieces of machinery. The first machine costs P50,000 more than the second machine. During the two-year life of these two alternatives, the first machine has P155,000 more cash flow in year one and a P110,000 less cash flow in year two than the second machine. All cash flows occur at year-end. The present value of 1 at 15% end of 1 period and 2 periods are 0.86957 and 0.75614, respectively. The present value of 1 at 8% end of period 1 is 0.92593 and period 2 is 0.85734. At what discount rate would Machine 1 equally acceptable as machine 2?
- Beyer Company is considering the purchase of an asset for $205,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 9% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 74,000 $ 59,000 $ 100,000 $ 166,000 $ 54,000 $ 453,000 a. Compute the net present value of this investment.b. Should Beyer accept the investment? Compute the net present value of this investment. (Round your answers to the nearest whole dollar.)Beyer Company is considering buying an asset for $350,000. It is expected to produce the following net cash flows. Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)Merigold company is considering investing in new equipment that will cost $1,417,000 with a 10-year useful life. The new equipment is expected to produce annual net income at $63,700 over its useful life. Depreciation expense, using the straight-line rate is $141,700 per year. Compute the cash pay back period. (Round answer to one decimal place, e.g. 15.2.)