Answered: Lodi Enterprises uses an after-tax MARR…

Lodi Enterprises uses an after-tax MARR of 15% per year. If the company’s effective tax rate (federal, state, and local taxes) is 38%, determine the company’s before-tax MARR.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Chatham Automotive [should/should not] replace the forklifts now since the minimum total EAC for the…

A: Given, For electric forklifts: Cost=$65,000 Salvage Value=$10,000 Operating Cost=$20,000 Increase…

Q: Your boss, whose background is in financial planning, is concerned about the company’s highweighted…

A: It is given that the weighted average cost of capital (WACC) of the company is 13 percent and the…

Q: If a loan of 8000 Bs. Is made, and which must be paid within 3 years, at a rate of 7% per year. Make…

A: Simple interest is determined on the principal amount, or original, a measure of a loan. compound…

Q: quired ormation A government-funded wind-based electric power generation company in the southern…

A: The Profitability Index (PI), also known as the Profit Investment Ratio (PIR) or the Value…

Q: A newly proposed project has a first cost of $ 242835 and estimated annual income of $49564 per year…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: Two friends each invested $20,000 of their own (equity) funds. Stan, being more conservative,…

A: a.) Year end value of equity can be calculated as follows: For person 1: Value of condo: For person…

Q: A project capitalized for ₱37,000 invested in depreciable assets will earn a uniform, annual income…

A: Capitalized Cost 37000 Annual Income 23209 Annual Cost 9000 Tax and insurance 4% of…

Q: Nuclear safety devices installed several years ago have been depreciated from a first cost of…

A: To perform an after-tax annual worth (AW) based replacement study, we need to consider the after-tax…

Q: A Machine costs ₱80,000 and an estimated life of 10 years with a salvage value of ₱5,000. What is…

A: A Machine costs ₱80,000 estimated life of 10 years salvage value of ₱5,000 i=9%

Q: A government-funded wind-based electric power generation company in the southern part of the country…

A: The objective of the question is to calculate the conventional Benefit/Cost (B/C) ratio for a…

Q: Salwa is considering three competing Food and Beverage projects for investment. The projected cash…

A: MARR refers to minimum accepted rate of return which simply means that when making an investment…

Q: The factory manager is considering the following two quotes from two vendors for purchace and…

A: In economics and finance, present value (PV), also known as present discounted value, is the current…

Q: A tax exempt municipality is considering the construction of a new municipal waste water treatment…

A: Given The first or initial cost for alternative A=-$15,361,975 First cost of alternative B…

Q: For each of the following factors, state if it will raise or lower the MARR: (a) Higher risk (b)…

A: As per the guidelines, we can answer only first three sub-part questions. If you want answer for…

Q: A manufacturing process at Core Manufacturing has a fixed cost of $60,000 per month. A total of 120…

Q: A company that makes several different types of skateboards, Jennings Outdoors, incurred interest…

A: a. Interest expense (IP) is $1,200,000 per year. Initial recived payment (RP) is $19,000,000. Face…

Q: Required Information A government-funded wind-based electric power generation company in the…

A: Given: Interest rate=10% Life=25 years

Q: The owner of a small pipeline construction company wants to determine how much he should bid in his…

A: A bid is an offer or proposal made by an individual, company, or organization to provide goods,…

Q: Economic

A: Rate of Return (ROR) Analysis for Viking, Incorporated Net Cash Flow SeriesViking, Incorporated's…

Q: (b) Given that nothing else is borrowed in the near future, the length of time it will take a…

A: Yield to maturity (YTM) is the total rate of return that a bond will have achieved after all…

Q: Harley worked for many years to save enough money to start his own residential landscape design…

A: The external rate of return is the rate of return on a project where any excess cash from a project…

Q: v are under F Neuber- eг year. be under- he budget - hand or urn if the

A: Answer The formula for calculating the present worth is as follows: Here, A is annual payment, n…

Q: Engineers at a semiconductor company developed an improved front-end-of-line (FEOL) formulation…

A: A measure of cash flow that considers the effect of taxes on profits is called CFAT after taxes.This…

Q: All of the following are examples of debt capital, except: (a) Mortgage on equipment (b) Long-term…

A: The debt capital is an important concept in the business economy. The debt capital is the capital…

Q: Question 4 An engineer at Suncore Micro, LLC, calculated the present worth of mutually exclusive…

A: The objective of this question is to determine the most profitable project bundle that can be…

Q: Required information A government-funded wind-based electric power generation company in the…

A: The BC ratio, or Benefit-Cost ratio, is a measure used in economics to evaluate the financial and…

Q: If the after-tax ROR is 11.4% and the corporate Te is 39%, the approximate before-tax rate of return…

A: The rate of return (ROR) before tax can be calculated by using the formula as follows:

Q: A $10,000 mortgage bond that is due in 20 years pays an interest of $250 every three months. The…

A: The objective of the question is to determine the interest rate of a mortgage bond that pays $250…

Q: Navistar Electric issued 1000 debenture bonds 8 years ago with a face value of $5,000 each and a…

A: The present worth of an investment represents the current value of all future cash flows associated…

Q: project capitalized for ₱40,000 invested in depreciable assets will earn a uniform, annual income of…

A: Capitalized Cost 40000 Annual Income 23451 Annual Cost 9000 Tax and insurance 4% i.e.…

Q: A project capitalized for ₱44,000 invested in depreciable assets will earn a uniform, annual income…

Q: nvestment projects may be appraised by calculating either Net Present Value (NPV) or Internal Rate…

A: Answer - Net Present Value (NPV) :- It is method to helps calculate the present value of…

Q: What is the Present Worth (PW) of an investment : Initial Cost - $40,000; Operation and Maintenance…

A: Present Worth refers to the value of a certain investment that is calculated or derived by…

Q: To finance a new project costing $45 million, a company borrowed $31 million at 16% per year…

A: Given: The company's total cost is = $45 million Borrowed amount is = $31 million The rate of…

Q: Engineers at a semiconductor company developed an improved front-end-of-line (FEOL) formulation…

Q: $ 80,000 investment project, it is estimated that annual after-tax net cash flows of $ 20,000 will…

A: Internal rate of return (IRR) refers to a method of discounting which makes the net present value of…

Q: Nuclear safety devices installed several years ago have been depreciated from a first cost of…

A: Initial Cost = 200000 The device can be sold for = 15000 Upgradation cost = 9000 Operating Expenses…

Q: Required information A government-funded wind-based electric power generation company in the…

A: The benefit-to-cost ratio is useful in making various investment-related decisions. The traditional…

Q: Calculate the Pl value. The Pl value is

A: The Profitability Index (PI) is a measure of a project’s or investment’s attractiveness. It…

Q: Gonzales, Inc. financed a new product as follows: $5 million in stock sales at 13.7% per year, $2…

Q: What is the amount and frequency of dividend payments on a bond that has a face value of $10,000 and…

A: Dividend is not paid on a bond. The fixed periodical payment on a bond is known as Coupon payment…

Q: 9) Shin Satellite Corp. issues 10,000 debenture bonds with a face value of $26,000 each and a bond…

A: There are 10000 debenture bonds.The face value is given as $26000 for each bond.The bond interest…

Q: Connor Designs Company has net cash flows from operating activities of $425,000 and net cash flows…

A: Free cash flow (FCF) is a measure of a company's ability to generate cash from its operations after…

Q: 11) What is the present worth of an independent project that requires initial investment of $50 000…

A: present value, also known as present discounted value, is the value of an expected income stream…

Q: project capitalized for ₱42,000 invested in depreciable assets will earn a uniform, annual income of…

A: Capitalized Cost 42000 Annual Income 20333 Annual Cost 9000 Tax and insurance 4% i.e.…

Q: A newly proposed project has a first cost of $ 230815 and estimated annual income of $49110 per year…

A: Present value is the value is the value of investment in today's dollar. Future value is value of…

Question

Lodi Enterprises uses an after-tax MARR of 15%
per year. If the company’s effective tax rate (federal,
state, and local taxes) is 38%, determine the
company’s before-tax MARR.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The consultancy Imagination Inc. is working with its manufacturing client Parts-R-Us to improve their on-time performance. The firm can earn a bonus of up to $1,000,000 based on how much the on-time performance actually improves. It's current (baseline) on-time performance is 90%. The company typically completes approximately 1,000 orders per month, with approximately 100 orders delayed. The bonus payment is prorated according to the following criteria: · The on-time performance improvement is calculated based on a reduction in late events or an improvement in on-time performance. · No bonus is earned for the first 25% reduction in late events, say from 100 to 75. Maximum bonus is earned once Parts-R-Us achieves 95% on-time performance. Please answer the following: Write down a formula to determine the total bonus amount to be received Using your formula, show how much bonus would be paid if Parts-R-Us achieves 94% on-time performance.
There are 3 alternatives. The first alternative provides before tax rate of return as 18% per year. The second alternative provides after tax rate of return as 17% per year and the last alternative gives annual worth of -20,000 baht per year. If after-tax MARR is 20% per year and tax rate is 30%, which alternative should be selected
Using Annual Worth Cost Method The engineer of a medium-scale industry was instructed to prepare at least two plans which is to be considered by management for the improvement of their operations. Plan A calls for an initial investment of 200,000 pesos now with a prospective salvage value of 20% of the first cost 20 years hence. The operation and maintenance disbursements are estimated to be 15,000 per year and taxes will be 2% of the first cost. Plan B calls for an immediate investment of 140,000 pesos and a second investment of 160,000 eight years later. The operation and maintenance disbursements will be 9,000 a year for the initial installation and 8,000 a year for the second installation. At the end of 20 years the salvage value shall be 20% of the investments. Taxes will be 2% of the first cost. If money is worth 12%, which plan would you recommend?
A government-funded wind-based electric power generation company in the southern part of the country has developed the following estimates (in $1000) for a new turbine farm. The MARR is 10% per year and the project life is 25 years. Benefits: $45,000 in year 0; $29,500 in year 5 Government savings: $2,000 in years 1 through 20 Cost: $58,000 in year 0 Disbenefits: $3000 in years 1 through 10 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Calculate the PI value. The PI value is
A project capitalized for PhP -4854362 is expected to earn a uniform annual revenue of PhP 1,000,000 in 10 years. The cost of operation and maintenance is PhP 100,000 a year, taxes and insurance will cost 3% of the first cost per year. If the company expects its capital to earn 12% income before taxes (MARR), would you recommend investing in the project? Use the FW method to justify.
X1 = 18% X2 = 600 *Do not use excel to solve the problem, use the equations and explain each step in details. *Draw a cash flow diagram.
Costa Rica Savings Bank issues 100,000 bonds as a response to the Costa Rica Central Bank's initiatives to increase domestic saving. The bonds have a face value of $40,000, a bond interest rate of 8% per year payable annually and a maturity date of 14 years. What is the current price one should pay for this bond, if the market interest rate is 9% per year, compounded annually? Requires to answer these questions using EXCEL spreadsheets. I am clueless went it comes to this subject and using EXCEL formulas so it would help if you provided which formula to use and how to enter it into EXCEL to get the correct answer. Don't just post values it will not help I need Excel formulas to enter in Excel. Thank you!
For a 60–40 D-E mix of investment capital, the maximum cost for debt capital that would yield a WACC of 10% when the cost of equity capital is 4% is closest to: (a) 8% (b) 12% (c) 14% (d ) 16%
To avoid the foreclosure of a 9,000 square foot parking lot near USC, a real estate developer was discussing alternatives with her lender. The developer bought the parking lot in an LLC for $7.2 million in 2017, with family and friends as equity investors and with a $3.6 million land loan at a 6% annual interest rate fully amortizing over 25 years with recourse to the borrower LLC. The developer planned to rezone the land from commercial use to residential use to build student housing to be completed in 2020, but it was taking years longer than she expected to get the necessary governmental approvals and by 2023 the investors were no longer able to continue making the required monthly debt service payments on the land loan. Which of the following loan workout alternatives would be LEAST likely to be acceptable to their current lender? a. Permanently reducing the interest rate on the mortgage loan or writing down the outstanding principal balance of the loan b. Finding a…
A plan for remodeling the downtown area of the city of Steubenville, Ohio, required the city to issue $5 million worth of general obligation bonds for infrastructure replacement. The bond interest rate was set at 6% per year, payable quarterly, with the principal repayment date 30 years into the future. The brokerage fees for the transactions amounted to $100,000. If the city received $4.6 million (before paying the brokerage fees) from the bond issue, (a) what interest rate (per quarter) did the investors require to purchase the bonds and (b) what are the nominal and effective rates of return per year to the investors?
Why is it financially unhealthy for an individual to maintain a large percentage of debt financing over a long period of time, that is, to be highly leveraged?
A newly proposed project has a first cost of $ 211962 and estimated annual income of $46410 per year for 10 years. Determine the PW value if the MARR is 10.4% per year.