A company is evaluating the replacement of an old machine with a new one last year the company hired a consultant to conduct a feasibility study about this replacement project which cost them $1,000,000 at that time. The consulting fees were expensed last year The old machine was purchased 3 years ago for $4 million and was being depreciated using MACRS 5.yoar class (20%, 32% 19 2%, 11 52% 11.52% and 5 76%) The old machine can be sold for S1 million at this time the old machine is not replaced it can be sold for $500,000 four years from now The replacement machine has a cost of $3 million an estimated usolulite of 4 years This machine will be depreciated using straight line method to salvage value. The replacement machine would permitan output expansions Sales would nse by $1.5 million per year even so the new machine's much greater efficiency would cause operating expenses to decline by $350.000 per year. The new machine would require that inventones to increase by 51 milion accounts receivables to increase by $750,000 accounts payable increase by $100.000 and accrued expenses increase by $300.000 The interest expense on the debt component of the capital required for this project will be $350 000 annually. The now machine can be sold for $125.000 at the end of 4 years to another company The company's marginal federal plus state tax rate is 30% and WACC is 125 What is the CH4 (The cash flow to be used in NPV calculation) 2.307,500 1,974.500 2481 200 2.756.400 3,018,200

A company sold a piece of equipment at the beginning of year 1, receiving a $29,000, two – year 1% note. Interest is paid at the end of each year. Market interest rates are assumed to be 10%

1. Calculate the present value of the note receivable

2. Prepare journal entries for the sale, interest revenue, and cash collection each year for two years

A ten year bond has a coupon rate of 7% and a yield to maturity of 9%, will you be willing to pay $1100 for this bond. Please explain.

A company purchased a new equipment for $59,000. Assume it will be retired in year 8, with a salvage value of $3,000. Calculate the depreciation for each year of the useful life using the following three methods. Please show your work. a. Straight-line method b. Double declining-balance method c. Sum-of-the-years-digits method c.Among various financial performance measures, which one does the depreciation have a role in?

Sales on account for the first two months of the current year are budgeted as follows.

All sales are made on terms of 2/10, n/30 (2 percent discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows.

Compute the estimated cash collections on accounts receivable for the month of February.

The current annualized yield on a 1-year STRIPS is 2.4% and the annualized yield on a 2-year STRIPS is 2.6%.  According to the expectations theory of interest rates, what will be the annualized yield on a 1-year STRIPS one year from now? What would you expect to pay for this STRIPS with a $1,000 face value?

Consider the following a. What is the duration of a four-year Treasury bond with a 10 percent semiannual coupon selling at par ? b. What is the duration of a three- year Treasury bond with a 10 percent semiannual coupon selling at par ? c. What is the duration of a two-year Treasury bond with a 10 percent semiannual coupon selling at par ? (For all requirements, do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

a. Duration of the bond ______ Years

b. Duration of the bond _______ Years

c. Duration of the bond _________ Years

Xavier Corporation predicts that net income in the coming year will be $300 million. There are 30 million shares of common stock outstanding and Xavier maintains a debt to equity ratio of .8. The current market price per share for Xavier is $100.

                        Required:

1. If Xavier wishes to maintain its present debt-equity ratio, calculate the maximum investment funds available without issuing new equity and the increase in borrowing that goes along with it. Show Computations
2. Suppose that the firm uses a residual dividend policy. Planned capital expenditures total $150 million. Based on this information, what will be the dividend yield and the dividend per share? Show computations
3. Suppose Xavier plans no capital outlays for the coming year. What will be the dividend yield and the dividend per share, assuming that Xavier uses the residual dividend policy? Show Computations

Explain why the Factory Overhead Balance must be disposed of at year end?