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Comparing machines with unequal lives

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,310,000 and will last for 4 years. Variable costs are 37 percent of sales and fixed costs are $157,000 per year. Machine B costs $4,520,000 and will last for 8 years. Variable costs for this machine are 32 percent of

Comparing Mutually Exclusive Projects: Equivalent Annual Cost (EAC)

Question: Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs $456,000, has a 3-year life, and requires $150,000 in pretax annual operating costs. System B costs $521,000, has a 5-year life, and requires $83,000 in pretax annual operating costs. Both systems are

A Survey of Multiple Choice and True/False Questions Related to Business

1. Two companies are contemplating a merger. In the new entity is expected to require an initial investment of $20 million which will then result in expense savings of $2.7 million for 15 years. The weighted average cost of capital is 8%. The firm just issued bonds at 6.5%. The company would expect the following financial result

Choice between four retirement annuities - Jill Chew

P3-41. Jill Chew wishes to choose the best of four immediate retirement annuities available to her. In each case, in exchange for paying a single premium today, she will receive equal annual end-of-year cash benefits for a specified number of years. She considers the annuities to be equally risky and is not concerned about their

Equivalent Annual Cost: The Oklahoma Electric Company (OEC) is currently evaluating two different options to control the emissions from their coal-burning electric generation facility in Dewar.

The Oklahoma Electric Company (OEC) is currently evaluating two different options to control the emissions from their coal-burning electric generation facility in Dewar. A filtration system will cost $12 million to install and $700,000 per year to operate. The filtration system, which will have a salvage value of zero at the end

NPV and IRR : explained

NPV/IRR. Consider projects A and B. Cash Flows, Dollars Project C0 C1 C2 NPV at 10% A -30,000 21,000 21,000 +$6,446 B -50,000 33,000 33,000 + 7,273 Calculate IRRs for A and B. Which project does the IRR rule suggest is best? Which project is really best?

Comprehensive Depreciation Computation - Sheryl Crow Corporation

(Comprehensive Depreciation Computations) Sheryl Crow Corporation, a manufacturer of steel products, began operations on October 1, 2006. The accounting department of Crow has started the fixed-asset and depreciation schedule presented on page 563. You have been asked to assist in completing this schedule. In addition to ascert

Bond Price, Future Value of Investment, Annuity

1. Today is t=0. Consider the following bonds in which the first coupon payment (if any) will begin in t=1. Bond.....................Coupon Rate (Annual payment).................Maturity (years) A..............................................0%....................................................3 B...................

PV of uncertain cash flows

Question and answers are provided: But, Please Use a BA II calculator to solve. I need to learn how to solve with a BA II financial calculator. please list, step by step instructions. See Below: 9. PV of uncertain cash flows . A project with a 3-year life has the following probability distributions for possible end-o

Saving for Retirement

1. Assume that you are 40 years old and wish to retire at age 65. You expect to be able to average a 6% annual rate of interest on your savings over your lifetime (both prior to retirement and after retirement). You would like to save enough money to provide $8,000 per year beginning at age 66 in retirement income to supplement

Calculating Annuity Values

Need help solving the following problem: Deposited $3,000 at the end of each of the next 20 years into an account paying 10.5% interset, how much money will I have in 20 years, and have if I make deposits for 40 years?

Return on Investing $9,000 Today

Complete the following Problems from Foundations of Financial Management (11th ed.) Stanley B. Block and Geoffrey A. Hirt Irwin/McGraw-Hill, 2005 Burr Ridge, IL Chapter 9 3. If you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? b. In 7 years at 12 percent? c. In 25 years at 14 percen

Stephanie must decide between two alternatives for the weekend

See attachment. Stephanie must decide between two alternatives for the weekend: babysitting or yard work. If she baby sits, she will receive $40 and will incur $15 in food and snack costs. If she does yard work, she will receive $40 and will incur $3 in lawn mower gas and oil costs and $5 in snack costs. The amount to be rece

Determinants of Interest Rates Questions

1. Calculate the present value of $5,000 received five years from today if your investments pay: a. 6 percent compounded annually b. 8 percent compounded annually c. 10 percent compounded annually d. 10 percent compounded semi-annually e. 10 percent compounded quarterly What do your answers to these questions tell you

Present Value

If I receive $550 each quarter for the next 5 years and receive an investment return of 8% compounded quarterly, what is the present value? $550 received per quarter for the next five years. Invest and receive a return of 8% compounded quarterly. What is the prevent value worth? Please show me the steps of how you solve th

Solving Various Finance-Related Questions

1.) If Company A is acquiring Company B, how do I complete the following table? Table 1 Net Annual Cash Flow Discount Rate Estimated Value Company A $42,274 0.09 Company B $13,658 0.12 "Before A+B" Benefits -------------------------- ---------------------- --------------------- Less Currency Risk $1,850 0.05 Cost

Compound Interest

Here are the exercises: Can you also briefly explain why with 2-3 sentences, Thank you I am trying to better understand it. 1. (Compound interest) To what amount will the following investments accumulate? Why you think this way? a. $5,000 invested for 10 years at 10 percent compounded annually b. $8,000 invested for 7 years

Compute the payback period. Is this a good measure of profitability? 2. Compute the NPV. Should Simon accept the proposal? Why or why not? 3. Compute the IRR. How does this compare with the required rate of return? Should Simon accept the proposal? 4. Using the accounting rate of return model, compute the rate of return on the initial investment.

Bob's Big Burgers is considering a proposal to invest in a speaker system that would allow its employees to service drive-through customers. The cost of the equipment (including installation of special windows and driveway modifications) is $30,000. Jenna Simon, manager of Bob's, expects the drive-through operation to increase a

T-F questions about taxation of corporations and partnerships

Please answer the attached questions with True or False. 1. Unreasonable compensation can be reclassified as a nondeductible dividend payment to the shareholder. 2. The corporation cannot deduct as a business expense interest payments to creditors who are also shareholders. 3. The IRS determines that compensation i

Financial Management

1)Rocking Horse Corporation reported net income for 2004 of $100,000, sales of $300,000, expenses (excluding depreciation) of $150,000, and depreciation expense of $50,000. The company's accounts receivable balance increased by $25,000 during the year and its accounts payable balance remained the same. The company's change in

P4-37 Annuities and Compounding

P4-37 Annuities and compounding Janet Boyle intends to deposit $300 per year in a credit union for the next 10 years, and the credit union pays an annual interest rate of 8%. a. Determine the future value that Janet will have at the end of 10 years, given that end-of-period deposits are made and no interest is withdrawn, if (1)

Forbes Company, Rice Corporation, Dolan Co.

Just wanted verification to see if I did anything wrong for the following questions. file attached. 1. Forbes Company paid $7,200 on June 1, 2004 for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2004 adjusting entry is a. debit Insurance Expense and credit Prepaid In

How large should the deposits be?

You want to purchase a car for $40,000 when you graduate in two years. At that time you will take out a 5-year bank loan at 12% compounded monthly. Based on your estimated earnings, you think you will be able to afford loan payments of $750 per month. You plan to save up the difference between the cost of the car and the amou