What 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. Select one: O a. $42,000 O b. -$8,264 O . - $2,688 O d. - $5,576 $33,800

What 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. Select one: O a. $42,000 O b. -$8,264 O . - $2,688 O d. - $5,576 $33,800

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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2. A company determines that the maximum they should pay for a new machine is $46,679. The company estimates the machine will produce a net cash flow of $8,000 per year and will last for 7 years. The interest rate that is acceptable to the company is 5%. At the end of 7 years the company estimates it will be able to sell the machine for what amount? A. $980 B. $391 C. $1,186 D. $ 68 E. $550
Assume that you calculated the ATER after year 3 as $275,000, the after-tax cash flow in year 4 was $6,800 and grew by 3% until year 8, and the ATER in year 8 was $300,000. Use this information to calculate the incremental IRR for not selling the property and collecting rents for years 4-8. What is the incremental IRR for not selling the property? A. 2.88% B. 4.29% C.-41.90% D. 6.40%
4. We-Clean-U, Inc., expects to receive $65,000 each year for 5 years from the sale of its newest soap, OnGuard. There will be an initial investment in new equipment of $150,000. The expenses of manufacturing and selling the soap will be $17,500 per year. Straight-Line Depreciation is to be used with $5,000 Salvage Value. Annual income tax rate is at 30%. a. Compute the ATCF for the 5-year period using the tabular method (Show YEAR, BTCF, DEPRECIATION, TAXABLE INCOME, INCOME TAX, ATCF). b. If the MARR for We-Clean-U is 12%, is OnGuard a worthwhile investment?
Let us assume that an investor can obtain an 80% LTV loan for a property valued at 500,000 at a 10% interest rate to be amortized over 25 years with monthly payments. If the property generates $70,000 net operating income per year, answer the following. What would be the Before-Tax Cash Flow from the Property Sale (BTCFs) if the property were sold in Year 5 for $440,000? $63,344.93 $816,655.07 $396,382.36 $440,000.00
Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per yearCost of equipment $130,000Salvage value at the end of the 8 th year $22,000Increase in working capital requirements $35,000Tax rate 25 percentLife 8 years The cost of capital is 13 percent. Required:iii. Calculate the after-tax payback period.iv. Calculate the accrual accounting rate of return on original investment for each of the eightyears.v. Calculate the net present value (NPV).vi. Calculate the internal rate of return (IRR).
4 b) Your company wants to purchase a phtostat machine which costs RM15,000. It will be obsolee in 5 years. Your opttions are to borrow the money at 10 percent or to lease the machine. If you lease the payment will be RM2,500 per year, payable at the end of each of the next five yaers. If you purchase the machine it will depreciate ar a straight-line basis. The tax rate is 34 percent. Prepare a table and calculate to justify whether you should lease or buy.
A firm buys a piece of equipment for $115,866.00 and will straight-line depreciate it to zero over five years. If the tax rate is 39.00%, what is the present value of the depreciation tax shield if the cost of capital is 10.00%? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint
2.-DO IT IN EXCEL, AND SHOW THE FORMULASIf the company purchases the machine, its cost of $276,000 will be financed with a loan at 14.8% interest for three years requiring equal annual payments including principal and interest. The machine will be depreciated at 20% per year. The company will pay $8,000 per year for maintenance services. The company plans to keep the machine even after its payback period.What is the amount of the annual payment? A) $120,480.90 B) $85,442.71 C) $276,000.00 D) $361,442.71
2.-DO IT IN EXCEL, AND SHOW THE FORMULASIf the company purchases the machine, its cost of $276,000 will be financed with a loan at 14.8% interest for three years requiring equal annual payments including principal and interest. The machine will be depreciated at 20% per year. The company will pay $8,000 per year for maintenance services. The company plans to keep the machine even after its payback period.What is the amount of the annual payment? A) $120,480.90 B) $85,442.71 C) $276,000.00 D) $361,442.71 (Choose one option)
A milling machine costing $18,000 will be depreciated using 7-year MACRS. The machine will be sold at the end of year 8 for $1000. The combined tax rate is 25%, and the MARR is 10%. What is the present worth of the after-tax cash flows? Submit your spreadsheet. Answer to the nearest whole dollar without the $ sign.
NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P40,000, a year. Assume that NUBD’s effective income tax rate is 40% for all years.What is the payback period?
Project the OCFs for the next three years considering incomes of $165k, $170K and $180 respectively, and a depreciation of $15K, $16K and $18K respectively. Consider a tax of 25%. (Use the following format: "$11.111; $11.111; $11.111) Answer. $65.588;$69.325;$76.800 Then, calculate the NPV (of the three years projected, don't include the current one) if your investment is $150K and the cost of opportunity is 10% (use the following format: $11.111) Answer $24.619 Decide if you invest or not in this project (use the following format: "Yes" or "No") Answer NoI need the process please

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