In December of 20x4, Atlas Chemical Corporation sold a forklift for $18,300. The machine was purchased in 20x1 for $80,000. Since then $59,200 in depreciation has been recorded on the forklift. 3. Determine the after-tax cash flow at the time the forklift was sold. The firm's tax rate is 31 percent. After-tax cash flow
Q: The spot rate between Canada and the U.S. is Can$1.2416/$, while the one-year forward rate is…
A: The covered interest arbitrage refers to the strategy of earning arbitrage profits by using the…
Q: The management of Unter Corporation, an architectural design firm, is considering an investment with…
A: Making decisions about capital budgeting entails assessing and choosing capital expenditures or…
Q: Alexandr makes 15 equal annual deposits of $1,000 each in a bank account paying 5% interest. How…
A: Future value refers to the anticipated value of an investment or asset at a specific point in the…
Q: A project's internal rate of return (IRR) is the discount rate ✓ ✔ that forces the PV of its inflows…
A: The IRR is the investment discount rate that corresponds to the difference between the original…
Q: he real risk-free rate (r*) is 2.8% and is expected to remain constant. Inflation is expected to be…
A: Yield of bond is the required rate of bond and it depends on the many factors liquidity, inflation…
Q: You are planning a trip to Australia. Your hotel will cost you A$135 per night for six nights. You…
A: Cost of trip = (Hotel cost per night + expense of meals) / Exchange rate.
Q: a. Calculate each project's NPV. Round your answers to two decimal places. Do not round your…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: sent value of bonds payable; premium Moss Co. issued $220,000 of four-year, 13% bonds, with…
A: Present value of the bonds payable/Issue price of the bonds = Present value of principal + Present…
Q: Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely…
A: Net present value is present value of future cash inflows less initial investment.Simple rate of…
Q: At 2% interest per year, what was the initial endowment amount (PW) that would permit $1 million…
A: Perpetuity refers to the instrument that pays a fixed annual interest payment to the holder…
Q: IDX Tech is looking to expand its investment in advanced security systems. The project will be…
A: Information Provided:Oustanding debt = $344 millionNumber of shares of common stock = 89…
Q: Market Rate Semiannual payments Cash Payment 10% Interest Expense Disc. or Prem. Amort. Today Period…
A: Price of bond is at premium that means above par value when interest rate is less than coupon rate…
Q: John and Judy Jacobson have purchased a house for $450,000. They are putting 20% or $90,000 down…
A: Compound = Monthly = 12Present Value of Loan = pv = $360,000Time = t = 30 * 12 = 360Interest Rate =…
Q: A utility company is considering adding a second feedwater heater to its existing system unit to…
A: Equivalent Annual WorthEquivalent annual worth is a financial metric used to compare different…
Q: 2. Major Bagel is an all-equity firm. It has 20 million outstanding shares currently priced at $25…
A: The Weighted Average Cost of Capital (WACC) is a vital financial metric that shows the average cost…
Q: A CNC mill was purchased 4 years ago for $50,000. The current market value is $26,000, which will…
A: Variables in the question:Value of CNC mill over the next 5 years :Year 1=$20000Year 2=$16250Year…
Q: Matt plans to start his own business once he graduates from college. He plans to save $3,000 every…
A: The future value of the investments refers to the value of the investment at the end of the period,…
Q: In November 2007, for example, General Motors (GM) announced that it would take a write-off of about…
A: A write-off, characterized by the deduction in the value of an asset or earnings equivalent to an…
Q: he pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates…
A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…
Q: The WACC is used as the discount rate to evaluate various capital budgeting projects. However, it is…
A: Please note that under answering guidelines only the first question can be solved. Since multiple…
Q: On January 1, 2023, Pearl Corporation purchased a newly issued $1,200,000 bond. The bond matured on…
A: Present Value can be calculated using PV function in excelPV (rate, nper, pmt, [Fv], [type])Rate The…
Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…
A: Here,Weight of Equity60%Weight of Debt40%Cost of Equity17%Cost of Debt8%Tax Rate30%After Tax Cost of…
Q: Payback period was the earliest -Select- The -Select- a project's payback, the better the project…
A: Payback period (PBP) refers to the period or duration within which the company is able to recover…
Q: Lopez Company is considering three alternative investment projects below: Project 1 5.2 years…
A: Payback Period: The time required to recover the initial investment in a project. Choose an option…
Q: An oil-drilling company must choose between two mutually exclusive extraction projects, and each…
A: Initial outlay is $12 million.Plan A cash inflow at year 1 is $14.4 million.Plan B cash inflows from…
Q: a. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is…
A: Earnings per share (EPS) shows how much of a company's profits are distributed to each outstanding…
Q: pose Hassan decides to explore the costs of financing a more expensive vehicle. The more expensive…
A: Here,Vehicle cost is $34,900Interest Rate of Dealer's Financing is 3.9%Tenure of Dealer's financing…
Q: e 13-year, $1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market…
A: Price of bond is the present value of coupon payments plus present value of the par value of bond…
Q: variance of this portfolio? The standard deviation?
A: Variance - It is the average of the squared differences from the mean . It quantifies how much…
Q: Suppose Alcatel-Lucent has an equity cost of capital of 9.5%, market capitalization of $11.84…
A: Free cash flow of equity:“Free cash flow of equity” refers to the cash that a company generates…
Q: A project has annual cash flows of $4,500 for the next 10 years and then $9,000 each year for the…
A: Net Present Value or NPV refers to the capital budgeting technique used for evaluating the…
Q: You have accepted your first job in Calgary. You are told it is a three-year contract and you have…
A: Monthly fee=$750Period=3yearsMonthly lease=$1500Purchase price=$170000Selling price=$185000
Q: Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are…
A: According to bartleby guidelines , if multiple questions are asked , then 1st question needs to be…
Q: The camera you want to buy costs $495 in the U.S. How much will the identical camera cost in Canada…
A: Cost to buy in Canada = Cost in USA / Exchange rate .
Q: Suppose all assumptions of the Capital Asset Pricing Model are true. Consider two firms A and B,…
A: Since Firm A is purely fairness-financed, its value of equity (Re) is equal to the anticipated…
Q: Problem 14-18 (Algo) Net Present Value Analysis [LO14-2] Oakmont Company has an opportunity to…
A: The net present worth of an investment can be one of the capital budgeting decision tools that will…
Q: An investor requires an effective return of at least 20 % per year. Find the minimum annual nominal…
A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…
Q: Given the following information, calculate the volatility of stock XYZ’s returns: Economic Scenario…
A: Economic scenarioProbabilityReturnBoom15%24%Normal55%12%Bust30%-9%
Q: Homesaver Ltd believes it can sell 10,000 home smoke detectors per year at $40 each. Variable cost…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: You are given the following information concerning three portfolios, the market portfolio, and the…
A: Alpha= Portfolio return - Expected return= Rp - (Rf + B*(Rm-Rf))= 13.6%-(5%+1.25*(11.5%-5%))= 0.475%
Q: Credenza Industries is expected to pay a dividend of $1.55 at the end of the coming year. It is…
A: capital gain refers to the profit that is attained by deducting the current stock price from the…
Q: Woodard Company wants to buy a numerically controlled (NC) machine to be used in producing specially…
A: Net present value (NPV) = Present value of future cash flow - Initial outlayPresent value = Future…
Q: You buy a share of The Ludwig Corporation stock for $18.40. You expect it to pay dividends of $1.08,…
A: The growth rate in dividend is calculated using following compounded average growth rate…
Q: Suppose you want to purchase a $301,000 home, and you have the required $55,000 down payment in…
A: A mortgage refers to a covered loan that is borrowed for purchasing a property with the property…
Q: The following bond list is from the business section of a newspaper on January 1, 2016. Notice that…
A: A bond is a debt market instrument that offers a stream of fixed income for a defined number of…
Q: 3. Lease vs Buy: You are considering whether to buy or lease a Jeep Wrangler. For a Wrangler priced…
A: Lease is kind of finance agreement in which only periodic payments are paid and no large investment…
Q: Esfandairi Enterprises is considering a new three-year expansion project that requires an initial…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: Problem 24-11 Consider the following information regarding the performance of a money manager in a…
A: Manager return = Sum of (Actual Weight * Actual Return)Index return = Sum of (Benchmark Weight *…
Q: Linke Motors has a beta of 1.30, the T-bill rate is 3.00 %, and the T-bond rate is 6.5%. The annual…
A: A financial model known as the Capital Asset Pricing Model (CAPM) creates a linear link between an…
Q: Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.70 0.180…
A: Pete corp:Beta = 1.70Expected Return = 0.180Repete Co. :Beta = 1.39Expected return = 0.153
Please do not give solution in image format ?
Step by step
Solved in 3 steps
- The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $178,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. *** a. What is the book value of the equipment? The book value of the equipment after the third year is $. (Round to the nearest dollar.)Daly Publishing Corporation recently purchased a truck for $30,000. Under MACRS, the first year’s depreciation was $6,000. The truck driver’s salary in the first year of operation was $32,000. The company’s tax rate is 30 percent. Required: 1-a. Calculate the after-tax cash outflow for the acquisition cost and the salary expense. 1-b. Calculate the reduced cash outflow for taxes in the first year due to the depreciation.
- A machine was purchased 1 year ago for $50,000. At the time of purchase, it had an estimated life of 5 years with no salvage value. Now, 1 year later, it can be sold for $45,000. The corporate tax rate is 36.5%. What are the total net cash proceeds from the sale of the equipmentDaly Publishing Corporation recently purchased a truck for $43,000. Under MACRS, the first year's depreciation was $8,600. The truck driver's salary in the first year of operation was $61,800. The company's tax rate is 30 percent. Required: 1-a. Calculate the after-tax cash outflow for the acquisition cost and the salary expense. 1-b. Calculate the reduced cash outflow for taxes in the first year due to the depreciation. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Calculate the after-tax cash outflow for the acquisition cost and the salary expense. After-Tax Cash Outflow Acquisition cost Salary expenseGarrison Corporation is considering the replacement of an old machine that is currently being used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine, Picco Company has offered to purchase it for $60,000 on the replacement date. Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage ofthe old machine? A. $32,000B. $36,000C. $47,200D. $40,800
- A firm purchased $62,800 of fixed assets two years ago. The company no longer needs these assets so it is going to sell them today for $28,500. The assets are classified as five-year property for MACRS. The MACRS rates are .2, .32, .192, .1152, .1152, .0576, for Years 1 to 6, respectively. What is the net cash flow from this sale if the firm's tax rate is 23 percent and no bonus depreciation is taken? $29,281.04 $26,576.00 $28.878.12 $27,516.60 O $29,648.12A Company is considering a proposal of installing a drying equipment. The equipment would involve a Cash outlay of 6,00,000 and net Working Capital of 80,000. The expected life of the project is 5 years without any salvage value. Assume that the company is allowed to charge depreciation on straight-line basis for Income-tax purpose. The estimated before-tax cash inflows are given below: Year Before-tax Cash inflows ('000) 1 2 3 4 5 240 275 210 180 160 The applicable Income-tax rate to the Company is 35%. If the Company's opportunity Cost of Capital is 12%, calculate the equipment's discounted payback period, payback period, net present value and internal rate of return. The PV factors at 12%, 14% and 15% are: Year 1 2 3 4 5 PV factor at 12% 0.8929 0.7972 0.7118 0.6355 0.5674 PV factor at 14% 0.8772 0.7695 0.6750 0.5921 0.5194 PV factor at 15% 0.8696 0.7561 0.6575 0.5718 0.4972 10-22is planning to acquire a new machine at a total cost of P360,000. The estimated life of the machine is 6 years with no salvage value. The straight-line method of depreciation will be used. NUBD estimates that the annual cash flow from operations, before income taxes, from using this machine amounts to P90,000. Assume that NUBD’s cost of capital is 8% and the income tax rate is 40%. (Use 3 decimal places for the PV factors)What would be the net present value?
- Sussman industries purchased a drilling machine for $50,000 and paid cash. Sussman expects to use the machine for ten years after which it will have no value. It will be depreciated straight-line over the ten years. Assume a marginal tax rate of 40%. What are the cash flows associated with the machine?A. At the time of purchase?b. In each of the following ten years?The Kings Inn Resort purchased three delivery carts 5 years ago. The delivery carts initially cost $60,000 and are depreciated on a straight line basis over 10 years. The effective tax rate for the company is 40%. Part A: What is the net cash flow if they sell the used carts for $36,000? Part B: What are the net cash flows if they sell the used carts for $30,000? Part C: What is the net cash flow if they sell the used carts for $25,0001. Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years. (a) Tabulate the cash flows by hand after an effective 32% tax rate is applied. Use the format of Table 17–3. (b) Continue the table above and calculate the net income (NI) estimates. Year of ownership 1 2 3 4 $ 80,000 - 20,000 150,000 -40,000 100,000 -50,000 Gross income, 120,000 -30,000 Expenses, $