Category: Uncategorized

Power Manufacturing has equipment that it purchased 7 years ago for $2,150,000. The equipment was used for a project that was intended to last for 9 years. However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $320,000 today. The company’s tax rate is 34 percent. What is the aftertax salvage value of the equipment?

Bruno’s Lunch Counter is expanding and expects operating cash flows of $30,900 a year for 4 years as a result. This expansion requires $77,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $6,200 of net working capital throughout the life of the project, which will be fully recovered at the end. What is the net present value of this expansion project at a required rate of return of 11 percent?

If you approve of government working closely with large, privately owned companies, then you probably support

A project with an initial cost of $30,200 is expected to provide cash flows of $10,930, $9,030, $8,870, and $9,280 over the next four years, respectively. If the required return is 9.3 percent, what is the project’s profitability index?

Power Manufacturing has equipment that it purchased 6 years ago for $2,100,000. The equipment was used for a project that was intended to last for 8 years. However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $310,000 today. The company’s tax rate is 40 percent. What is the aftertax salvage value of the equipment?

What is the value of one share of stock whose most recent dividend was $5.25 if the dividend is expected to grow 2.25 percent next year and every year thereafter and if the appropriate required return is 8.25 percent per year?

Country Breads uses specialized ovens to bake its bread. One oven costs $251,000 and lasts about 15 years before it needs to be replaced. The annual operating cash outflow per oven is $34,000. What is the equivalent annual cost, or EAC, of an oven if the required rate of return is 16 percent?

A company purchased an asset for $3,500,000 that will be used in a 3-year project. The asset is in the 3-year MACRS class. The depreciation percentage each year is 33.33 percent, 44.45 percent, and 14.81 percent, respectively. What is the book value of the equipment at the end of the project?

Alt’s is contemplating the purchase of a new $274,000 computer-based order entry system. The system will be depreciated straight-line to zero over the system’s five-year life. The system will be worthless at the end of five years. The company will save $95,900 before taxes per year in order processing costs and will reduce its net working capital by $20,000 immediately. The net working capital will return to its original level when the project ends. The tax rate is 21 percent. What is the internal rate of return for this project?

Which of the following would be considered a part of the power elite?