Company has purchased a machine for $250, 000. You expect annual operating expenses of $12,000 and a salvage value of $7,000 at the end of its useful life of 4 years. It is expected to depreciate at a rate of 40% per year, on a declining balance basis. Your company's WACC is 9%, and your corporate tax rate is 45% What is your Capital Tax Factor? Assume the half-year rule does not apply

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
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Company has purchased a machine for $250, 000. You expect annual operating expenses of $12,000 and a salvage value of $7,000 at the end of its useful life of 4 years. It is expected to depreciate at a rate of 40% per year, on a declining balance basis. Your company's WACC is 9%, and your corporate tax rate is 45% What is your Capital Tax Factor?

Assume the half-year rule does not apply

A 0.648

B 0.550

C 0.640

D 0.551

E 0.633




Companies are issuing bonds with a face value of $1, 280. the bonds are selling at their par value. The bond issues 2 coupon payments evenly throughout the year, each with a value of $20. The bond has 9 years-to-maturity

What is the YTM of the bond? Enter answer as a percentage, rounded to the nearest hundredth of a percent

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