Question

In: Finance

A machine has a list price of $150,000 and comes with a rebate of $10,000. The...

A machine has a list price of $150,000 and comes with a rebate of $10,000. The machine can be financed at a 3% annual interest rate with monthly payments and compounding over 36 months. Assume that the annual market interest rate is 8%. Find the present value of your contractual cash flow if you purchase and finance the machine under these terms.

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

A firm is considering the purchase of a new machine at a price of $150,000.  The machine...
A firm is considering the purchase of a new machine at a price of $150,000.  The machine falls into the three-year MACRS class. If the new machine is acquired, the firm's investment in net working capital will immediately increase by $10,000 and then remain at that level throughout the life of the project. At the end of 3 years, the new machine can be sold for $16,000. Earnings before depreciation, interest and taxes (EBDIT) are expected to be as follows with...
1. On January 1, 2015, Reno Inc. purchased a machine for $150,000. The machine has an...
1. On January 1, 2015, Reno Inc. purchased a machine for $150,000. The machine has an estimated five year life, and no residual value. Double declining balance depreciation has been used for financial statement reporting and CCA for income tax reporting. Effective January 1, 2018, Reno decided to change to straight-line depreciation for this machine, and treated the change as a change in accounting policy. For calendar 2018, Reno’s pre-tax income before depreciation on this asset is $125,000. Their income...
You must evaluate a proposal to buy a new milling machine with purchase price of $150,000....
You must evaluate a proposal to buy a new milling machine with purchase price of $150,000. The machine will be depreciated to zero value over the 4 years using prime cost (straight line) method. The machine would be sold after 4 years for $70,000. Inventory will increase by $17,000 and account payables will rise by $7,500. All other working capital components will stay the same, so the change in net working capital is $9,500. The managers expect to fully recover...
You must evaluate a proposal to buy a new milling machine with purchase price of $150,000....
You must evaluate a proposal to buy a new milling machine with purchase price of $150,000. The machine will be depreciated to zero value over the 4 years using prime cost (straight line) method. The machine would be sold after 4 years for $70,000. Inventory will increase by $17,000 and account payables will rise by $7,500. All other working capital components will stay the same, so the change in net working capital is $9,500. The managers expect to fully recover...
You must evaluate a proposal to buy a new milling machine. The base price is $150,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $150,000, and shipping and installation costs would add another $16,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $67,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
Purchase Price $33,500.00 Finance Rate Table less Term No Rebate Rebate      Down Payment $3,500.00 1...
Purchase Price $33,500.00 Finance Rate Table less Term No Rebate Rebate      Down Payment $3,500.00 1 12.50% 19.70%      Trade-in Value $4,500.00 2 14.90% 20.90%      Rebate $1,000.00 3 17.30% 22.10% 4 18.50% 23.30% Loan Amount $24,500.00 5 19.70% 24.50% --------------------Term of Loan----------------------- 1 2 3 4 5 Finance Rate 19.70% 20.90% 22.10% 23.30% 24.50% Monthly Payment $2,266.03 $1,257.75 $936.93 $789.29 $711.94 Total Payment $27,192.35 $30,185.89 $33,729.63 $37,886.09 $42,716.61 Finance Charge $2,692.35 $5,685.89 $9,229.63 $13,386.09 $18,216.61 Please answer the following...
Purchase Price $33,500.00 Finance Rate Table less Term No Rebate Rebate      Down Payment $3,500.00 1...
Purchase Price $33,500.00 Finance Rate Table less Term No Rebate Rebate      Down Payment $3,500.00 1 12.50% 19.70%      Trade-in Value $4,500.00 2 14.90% 20.90%      Rebate $1,000.00 3 17.30% 22.10% 4 18.50% 23.30% Loan Amount $24,500.00 5 19.70% 24.50% --------------------Term of Loan----------------------- 1 2 3 4 5 Finance Rate 19.70% 20.90% 22.10% 23.30% 24.50% Monthly Payment $2,266.03 $1,257.75 $936.93 $789.29 $711.94 Total Payment $27,192.35 $30,185.89 $33,729.63 $37,886.09 $42,716.61 Finance Charge $2,692.35 $5,685.89 $9,229.63 $13,386.09 $18,216.61 Please answer the following...
The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost)...
The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $ 6,000 year 1 $ 12,000 year 1 $ -0- year 2 3,000 year 2 7,500 year 2 30,000 year 3 3,000 year 3 1,500 year 3 5,000 year 4 -0- year 4 1,500 year 4 20,000 Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose? Multiple...
You have decided to purchase a house that has a price of $150,000. You plan on...
You have decided to purchase a house that has a price of $150,000. You plan on putting 10% down and then financing the rest. Assuming you are able to get a 3% annual interest rate compounded monthly, what is your monthly payment?
A Machine purchased six years ago for Rs 150,000 has been depreciated to a book value...
A Machine purchased six years ago for Rs 150,000 has been depreciated to a book value of Rs 90,000. It originally has projected life of 15 years and zero salvage value. A new machine will cost Rs 350,000 and result in reduction of operating cost of Rs 40,000 in first year which will increase @8% for next eight years. The older machine could be sold for Rs 135,000. The cost of capital is 10%. The new machine will be depreciated...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT