Build Corporation wants to purchase a new machine for $295,000. Management predicts that the machine can produce sales of $187,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $69,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Build's combined income tax rate is 20%. Management requires a minimum after-tax rate of return of 10% on all investments.   What is the net present value (NPV) of the investment, rounded to the nearest whole dollar? (The PV annuity factor for 5 years, 10% is 3.791.) Assume that the cash inflows occur at year-end

Q: A project has the following annual incremental after-tax cash flows (OCFs) that follow an initial…

A: Initial Investment = $ 10 million Year Cash Flows PVIF @ 18% Discounted Cash Flows  1   5…

Q: Find the interest on Php 750 invested at 9% per annum for 2 years and 6 months

A: Solution:- When an amount is deposited somewhere, it earns interest on it. The amount initially…

Q: Bruin, Incorporated, has identified the following two mutually exclusive projects: Year 0 1 2 1234 3…

A: To Find: IRR NPV NPV profile for both projects

Q: The Ginsberg Co. issued 10-year bonds on April 30, YR 1. The debt has a face value of $1,000,000 and…

A: Present value of bond Present value of bond is the sum of the present value of all periodic interest…

Q: Assume that Steven is 28 years old, works as a lawyer and plans to retire at the age of 55. He is…

A: The concept of the time value of money is one of the most used concepts in finance. It is used to…

Q: A firm depreciated its assets with regard to an investment to $0.00 book value by the end of the…

A: Here, Scrap Market Value = $1,200,000 Life of the project = 15 years Interest rate = 14% Tax rate =…

Q: Question content area top Part 1 ​(Related to Checkpoint​ 9.4)  ​(Bond valuation) A bond that…

A: Solution: Bond price means the current market price of bond. Bond price = Present value of coupon…

Q: 31 company branch has an investment turnover of 2 times. The minimum return on investment set as…

A: Investment turnover is one of the efficiency ratio which shows turnover or sales is how much times…

Q: An investor buys a five-year, 7.5% annual coupon bond priced to yield 5%. The investor plans to sell…

A: Par Value of Bond is $1000 Coupon rate is 7.5% Yield is 5% Time to maturity is 5 years Bond is sold…

Q: The firm you founded currently has 13 million shares, of which you own 6 million. You are…

A: Total no of shares – 13 mil  shares Shares owned- 6 mil IPO:shares -  2 mil Price -$ 16 each

Q: A $4 million investment today, in a project to last 10 years,  is believed to result in the…

A: Given: Investment today=$4 million Number of years=10 years=n Sales=$21,00,000 Operating…

Q: A firm has a long-term debt–equity ratio of 0.50. Shareholders’ equity is $2.0 million. Current…

A: Debt equity ratio- 0.50 Equity - $2.0 million CA- $ 320,000 Total assets - $3,200,000 Current ratio…

Q: Acme Annuities recently offered an annuity that pays 5.4% compounded monthly. What equal monthly…

A: We need to use future value of ordinary annuity formula to calculate monthly deposit or payment. PMT…

Q: On an annual renewable lease, the semi-annual lease payment on office space is $7,500 payable at the…

A: Lease payment would gives the right to use the equipment during the period of lease as per need and…

Q: 1. Assume you have just been hired with an annual salary of P300,000. If you expect annual raises of…

A: FV or Future value = PV or Present value *(1+interest rate)^n. Alternatively use the FV Function in…

Q: The annual discount rate is 7.70%. a. What is the present value of a perpetuity that pays 2,000 at…

A: Perpetuity is a situation where a stream of Cashflow payments continues indefinitely or is an…

Q: Illustration 12: The returns of Security of Wipro and Security of Infosys for the past six years are…

A: Let us denote the security of Wipro return by "X "and security of Infosys return by  "Y". Data given…

Q: Mystery Motors, Inc. stock has the following forecasted returns for various states of the economy:…

A: Here, To Find: Standard deviation =?

Q: A $4 million investment today, in a project to last 10 years,  is believed to result in the…

A: NPV is the technique under capital budgeting which help in decision making on the basis of future…

Q: An investor buys a five-year, 7.5% annual coupon bond priced to yield 5%. The investor plans to sell…

A: Par Value of Bond is $1000 Coupon rate is 7.5% Yield is 5% Time to maturity is 5 years Bond is sold…

Q: Margoles Publishing recently completed its IPO. The stock was offered at a price of $14.14 per…

A: Price offered- $14.14 per share Closing at the first day - $ 19.15 per share Underwriting spread –…

Q: What is the most crucial aspect of the transition from serial to batch processing?

A: Batch accounting is referred as the transferring system of an items from the ledger, journal, and…

Q: In the foreign exchange spot market, one Indian Rupee can buy 2.80 Malaysian Ringgit. The Malaysian…

A:

Q: You decide to finance a $21,000.00 car at a 4% interest rate for 4 years. A. How much will your…

A: Car cost ,P =$21,000 Interest Rate, r= 4%=0.04/12= 0.003333333333 Years,n = 4 or 48 months  Formula…

Q: House 6 years 2 What is the On the ان price . 4) $8286,24 $2125 24th 15% intrest (compounded mont…

A: Loans are paid by monthly payments these carry the payment for interest and payment for principal…

Q: O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal…

A: Data given: Par value= $1000 PV= $1075 N= 25 years nper= 25*2 =50 YTM= 9.25% Semi-annual rate=…

Q: A project requires a $1 million initial investment, and will yield incremental after-tax cash flows…

A: Net present value is the present value of cash inflows discounted at the required rate of return for…

Q: If​ Pepperdine, Inc.'s return on equity is 16 percent and the management plans to retain 56 percent…

A: In finance growth rate of a firm is the maximum growth that an entity can see or can achieve without…

Q: For a company holding significant net financial assets (NFO), after issuing some new debt, its risk…

A: By issues of new debt there would be more interest to be paid and liabilities of company would…

Q: Zannel plc is considering a new project to produce a revolutionary surveillance device. The initial…

A: NPV is a technique in Capital Budgeting which help in decision making on the basis of future cash…

Q: Given that a​ firm's return on equity is 17 percent and management plans to retain 37 percent of…

A: In finance growth rate of a firm is the maximum growth that an entity can see or can achieve without…

Q: The Anson Jackson Court (AJC) currently has $150,000 market value (and book value) of perpetual debt…

A: Given, The market value of firm is $820,000 New capital structure consist of 50% of debt and 50% of…

Q: Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:…

A: Given: Year Particulars Amount 0 Cash flows -$38,000,000 1 Cash flows $57,500,000 2 Cash…

Q: A man deposits P100,000.00 in a bank at 7% compounded monthly for 6 years. If the inflation rate of…

A: Deposited amount = P100,000 Interest rate = 7% Time period = 6 years Inflation rate = 6.75%

Q: It is a tax on the value of an article increased at each stage of its production or distribution.…

A: Excise tax is a type of indirect tax employed in case of specific goods (eg. fuel, tobacco,…

Q: what is the value of the common stock if the investors require a 15 percent rate of​ return?

A: Value of Common Stock: The value of the common stock is primarily derived from the current value to…

Q: How much does Jeanette need in her account when she retires?

A: Present Value: It is computed by discounting the future annuity cash payments by an appropriate…

Q: This is a regional government's expenditure whose benefits exceed one fiscal year and will augment…

A: Solution: Government spends money from its treasuries to spend for various facilities for people in…

Q: f 25%. What will be the WACC for this project? (Note: Round your intermediate calculations to two…

A: WACC: It represents the company's average cost of capital.  Thus, it is estimated by the sum of the…

Q: Last year, National Co. has an Earnings per share of P8. Even though the firm will grow at rate of…

A: We need to use constant growth model to calculate the price of common stock. Common stock price…

Q: Munich Re Inc. is expected to pay a dividend of $4.82 in one year, which is expected to grow by 4% a…

A: Required return for common stock =(D1/ Current price)+Growth rate =(4.82/69)+0.04 =0.1098550725…

Q: IRR

A: Internal rate of return refers to the financial method which is used for calculating the…

Q: The table below shows some actual data concerning exchange rates and the prices of SuperDuper…

A: In Toronto, Canada  1 super duper burger = 5.3 Canadian $ Purchasing Power parity means exchange…

Q: An investor buys a five-year, 7.5% annual coupon bond priced to yield 5%. The investor plans to sell…

A: Par Value of Bond is $1000 Coupon rate is 7.5% Yield is 5% Time to maturity is 5 years Bond is sold…

Q: A new project will result in the annual incremental production of 5,000 sonar units.  Each unit will…

A: Solution:- Operating cash flow (OCF) means the cash flow available to a firm after paying taxes on…

Q: These are involuntary fees levied on individuals or corporations and imposed by the government…

A: Excise taxes are taxes levied on specified goods. These are indirect taxes that the consumer may not…

Q: Given a compounded interest rate equivalent 13.25% compounded quarterly for 3.5 years. Find the…

A: Accumulated factor value refers to the value or multiple times, an amount of investment will become…

Q: 1.) Which is false concerning standard deviation? a. The smaller the standard deviation is the less…

A: Standard deviation measures the deviations of dataset from the expected mean . In finance, standard…

Q: An ordinary annuity pays 7.08% compounded monthly. (A) A person deposits $150 monthly for 30 years…

A: Interest rate is 7.08% Compounded monthly Part-(A)  Deposits per month is $150 Time period of…

Q: Amina needs$________ in her account when she retires. How much total money will Amina pull out of…

A: Present Value of Annuity: It represents the present worth of the future stream of annuity cash…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.