BrummittCorporation is evaluating a new 4-year project. The…

BrummittCorporation is evaluating a new 4-year project. The equipment necessary for the project will cost $2,300,000 and can be sold for $293,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company’s tax rate is 21 percent. What is the aftertax salvage value of the equipment?

What is the expected return of an equally weighted portfolio…

What is the expected return of an equally weighted portfolio comprised of the following three stocks? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .25 .19 .13 .07 Normal .72 .15 .05 .13 Bust .03 −.29 −.14 .22

Underground Funeral Services has annual sales of $885,500. T…

Underground Funeral Services has annual sales of $885,500. The cost of goods sold is equal to 90 percent of sales. The firm has an average accounts receivable balance of $87,600 and an average accounts payable balance of $72,900. How many days, on average, does it take the firm to pay its suppliers?

A gym owner is considering opening a location on the other s…

A gym owner is considering opening a location on the other side of town. The new facility will cost$1.52 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $569,000 in annual sales. Variable costs are 44 percent of sales, the annual fixed costs are $92,500, and the tax rate is 21 percent. What is the operating cash flow?

A project has projected cash flows of −$148,500, $32,800, $6…

A project has projected cash flows of −$148,500, $32,800, $64,200, −$7,500 and $87,300 for Years 0 to 4, respectively. Should this project be accepted based on the combination approach to the modified internal rate of return if both the discount rate and the reinvestment rate are 10.5 percent? Why or why not?

Bleakly Enterprises has a capital structure of 56 percent co…

Bleakly Enterprises has a capital structure of 56 percent common stock, 4 percent preferred stock, and 40 percent debt. The flotation costs are 3.7 percent for debt, 4.8 percent for preferred stock, and 5.2 percent for common stock. The corporate tax rate is 21 percent. What is the weighted average flotation cost?

Based on the past 13 years, Valdez Interiors common stock ha…

Based on the past 13 years, Valdez Interiors common stock has yielded an arithmetic average rate of return of 12.6 percent. The geometric average return for the same period was 11.8 percent. What is the estimated return on this stock for the next three years according to Blume’s formula?