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Fundamentals Of Corporate Finance, 9th Edition
9th Edition
ISBN: 9781260052220
Author: Richard Brealey; Stewart Myers; Alan Marcus
Publisher: McGraw-Hill Education
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Chapter 9, Problem 17QP
Summary Introduction
To determine:
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Students have asked these similar questions
Ilana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1.4
million. The lathe will cost $49,000 per year to run, but it will save the firm
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purposes, the lathe will be depreciated on a straight-line basis over its 10-year life
to a salvage value of $450,000. The actual market value of the lathe at that time
also will be $450,000. The discount rate is 10%, and the corporate tax rate is 20%.
What is the NPV of buying the new lathe? (A negative amount should be indicated
by a minus sign. Enter your answer in dollars not in millions. Do not round
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estimated salvage value of zero. Expected before tax cash savings from the new oven
are $4,000 a year over its full depreciable life. Depreciation is computed using straight
line over a 5 year life, and the cost of capital is 10%. At the end of the oven's life, it can
be sold for $2,000. Assume a 40% tax rate.
4.
What is the net present value of the new oven? IRR?
A firm is looking at a new project requiring a machine that would cost $500,000.The cost will be depreciated straightline to zero over the project's 5yr life at the end of which the machoine can be scrapped for $125,000. the tax rate = 23%. Calculate the machine's after-tax salvage value.
Chapter 9 Solutions
Fundamentals Of Corporate Finance, 9th Edition
Ch. 9 - Prob. 1QPCh. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 10QPCh. 9 - Prob. 12QP
Ch. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 17QPCh. 9 - Prob. 20QPCh. 9 - Prob. 21QPCh. 9 - Prob. 22QPCh. 9 - Prob. 23QPCh. 9 - Prob. 24QPCh. 9 - Prob. 25QPCh. 9 - Prob. 26QPCh. 9 - Prob. 27QPCh. 9 - Prob. 28QPCh. 9 - Prob. 29QPCh. 9 - Prob. 30QPCh. 9 - Prob. 32QPCh. 9 - Prob. 34QP
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