A company invested in a new machine that will generate reven…

A company invested in a new machine that will generate revenues of $35,000 annually for 7 years. The company will have annual operating expenses of $7,000 on the new machine. Depreciation expense, included in the operating expenses, is $4,000 per year. The expected payback period for the new machine is 5.2 years. What amount did the company pay for the new machine?

The common stock of a company is currently selling at $80 pe…

The common stock of a company is currently selling at $80 per share. The leadership of the company intends to pay a $4 per share dividend next year. With the expectation that the dividend will grow at 5% perpetually, what will the market’s required return on investment be for the common stock?

Mesa Company is considering an investment to open a new bana…

Mesa Company is considering an investment to open a new banana processing division. The project involves an initial investment of $45,000, and cash inflows of $20,000 can be expected in each of the next 3 years. The hurdle rate is 10%. The present value of an ordinary annuity of 1 discounted at 10% for 3 periods is 2.487. The present value of 1 due in 3 periods discounted at 10% is .751. What is the profitability index for the project?