Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Need helparrow_forwardWhat will be the annual cash outflows for Mimi Inc. if it leased a milling machine for $8, 200 per year for 5 years. Assume that the new machine cost $ 42,000 and will depreciate on a straight line basis over the 5 years and that Mimi has a tax rate of 32 percent. Question 15Select one: a. - $5,576 b. $42,000 C. -$8,264 d. $33,800 e. - $2,688arrow_forward13arrow_forward
- Firm X is considering the replacement of an old machine with one that has a purchase price of $100,000. The current market value of the old machine is $23,000 but the book value is $38,000. The firm's combined tax rate is 30%. What is the net cash outflow for the new machine after considering the sale of the old machine? Disregard the effect of depreciation of the new machine if acquired. Multiple Choice $72,500 $78, 370 $84, 850 $69, 100arrow_forwardAssume a machine was purchased 5 years ago for $800,000 and has been 75% depreciated. The firm decides to sell this machine for $350,000. The firm's tax rate is 20%. Calculate how much net cash the sale of this equipment will generate for the firm. Answer rounded to the nearest whole dollar; for example 42,345 for your answer.arrow_forwardEstimating Incremental Cash flow After- Tax 1. Galaxy Fans is considering a proposal to buy a new fixing machine. The price of the machine is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 4 years for $65,000. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. There would be no effect on revenues, but pretax labor costs would decline by $44,000 per year hence it is net saving by the new machine. The firm falls in 40% tax bracket. Required: Calculate the initial cash out flow at Year 0 What are the project’s annual net incremental cash flows during Years 1, 2, and 3? Find out the terminal cash flow of the new machine at year four.arrow_forward
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