The Bakerfield Company  purchased the current line of equipm…

The Bakerfield Company  purchased the current line of equipment for $5 Million 3 years ago.  It has a salvage value of 1 million and a useful life  when purchased was 8 years.   It is being depreciated as 7 year MACRS asset.   IF the 7 year MACRS table values is: YR          Deprec Rate 1                14.3% 2                 24.5 3                 17.5 4                 12.5 5                 8.9 6                 8.9 7                 8.9 8                 4.5 A.  What is the  depreciation expense for this equipment  the next two years (years 4 and 5)?   B.  What is the book value today?   (show the calculations) C.  If you could sell this asset today for $2.5 Million, and the tax rate is 24%, what would the “sell the old net of tax” value be when calculating the Initial Outlay for a proposed investment?

You have been given this information: Project               …

You have been given this information: Project                    A                    B NPV                     $300               $500 Project Life         5 years           9 years WACC                     12%                12%                                                        A.  If these projects are independent, what is your recommendation and why? B.  If these projects are mutually exclusive what is your recommendation and Why?   C.  What is the EAA of each project?

A company develops a survey scale intended to measure custom…

A company develops a survey scale intended to measure customer loyalty. The same customers complete the scale twice, one week apart, and receive nearly identical scores both times. However, further analysis shows that the questions actually capture customer satisfaction rather than loyalty. The scale appears to be: