In: Finance
A corporation has decided to replace an existing asset with a
newer model. Two years ago, the existing asset originally cost
$30,000 and was being depreciated under MACRS using a five-year
recovery period. The existing asset can be sold for $32,000. The
new asset will cost $75,000 and will also be depreciated under
MACRS using a five-year recovery period. If the assumed tax rate is
40 percent on ordinary income and capital gains, the initial
investment is ______.
Select one:
a. $54,240
b. $57,240
c. $42,000
d. $50,040
Which of the following is FALSE?
Select one:
a. Weights that use accounting values to measure the proportion of
each type of capital in a firm's financial structure are called
market value weights.
b. Use of the capital asset pricing model (CAPM) in measuring the
cost of common stock equity differs from the constant-growth
valuation model in that it directly considers the firm's risk as
reflected by beta.
c. Using the Capital Asset Pricing Model (CAPM), the cost of common
stock equity is the return required by investors as compensation
for a firm's nondiversifiable risk.
d. Weights that use accounting values to measure the proportion of
each type of capital in a firm's financial structure are called
book value weights.
Please Solve As soon as
Thank's
Abdul-Rahim Taysir