City Security is considering a project with an initial fixed asset cost of $5,600,000 which will be depreciated on the MACRS 5-year class over the 5-year of the project. At the end of the project, the book value will be zero and the equipment will be sold for an estimated $2,800,000. The project will not directly produce any sales but will save the firm $1,000,000 per year in pretax operating cost. The system requires an initial investment in net-working capital of $290,000.The tax rate is 35%. What is the after-tax salvage value of the equipment after 5 years? What are the depreciation and operating cash flows of each year i.e. from year 1 to year 5? Show your calculation

Thanks very much

John is looking at several options to fund his son’s 4-year university degree. The university fees of $45,000 a year will have be paid starting 11 years from today. He is analysing an insurance plan that pays out $45,000 a year for 4 years with the first payout 11 years from today. The insurance plan has several payment options:

Option 1 Pay $60,000 today.
Option 2 Beginning 1 year from today, pay $12,000 a year for the next 8 years.
Option 3 Beginning 1 year from today, make payments each year for the next 8 years. The first payment is $11,000 and the amount increases by 5% each year.

Can I have the cash flow time line for these 3 options with regards to calculating present value.

1.Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $91.20, while a 2-year zero sells at $84.28. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 6% per year.

a.What is the yield to maturity of the 2-year zero?

b.What is the yield to maturity of the 2-year coupon bond?

c.What is the forward rate for the second year? That is what is f_1,2?

2. Assume you purchase (at par) one 11-year bond with a 6.05 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.25 percent. If you sell the bond after 6 years when the yield to maturity is 7.05 percent, what is your realized yield?

(Hint: Think naturally)

On January 1, Year 1, Mudpond Company issued bonds with a $400,000 face value, a stated rate of interest of 5%, and a 10-year term to maturity. The bonds sold for $432,444. Mudpond uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 4%. Interest is paid annually on December 31.

REQUIRED:

1. Complete the amortization schedule below:

2. 	Cash Payment	Interest Expense	Amortization	Carrying Value
   1/1/Year 1
   12/31/Year 1
   12/31/Year 2

1. Prepare journal entries to record:
   1. Issuance of bonds on January 1, Year 1.
   2. Payment of interest on December 31, Year 1.
   3. Payment of interest on December 31, Year 2.   

2. Show the impact of these events on the horizontal financial statement model

**please i need full answer to understand this question**
5.43 Assume monetary benefits of an information system of $40,000 the first year and increasing benefits of $10,000 a year for the next five years (year 1=$50,000, year 2=$60,000,
year 3=$70,000, year 4=$80,000, year 5=$90,000).

One-time development costs were $80,000 and recurring costs were $45,000 over the duration of the system's life. The discount rate for the company was 11 percent. Using a six-year time
horizon, calculate the net present value of these costs and benefits. Also calculate the overall return on investment and then present a break-even analysis.

-At what point does breakeven occur?

5.43 Change the discount rate for Problem to12 percent and redo the analysis.

5.43 Change the recurring costs to $40,000 and redo the analysis.

Suppose the costs of an environmental pollution-control program are $35 million in year 0 (the start of the program), $55 million in year 1, and $35 million in year 2. Suppose the benefits of the program are $20 million in year 1, $45 million in year 2, and $70 million in year 3.  In this problem, t is defined as the year (so t = 0 for year 0, etc.). The regulatory authority requires the use of a discount rate of 5%.  Use all decimal places in the denominator - round the resulting values to two (2) decimal places and express in dollars ($).

a. Calculate the present value of costs (PVC).

b. Calculate the present value of benefits (PVB).

c. Calculate the present value of net benefits (PVNB).

d. Given your response to part c., should the environmental pollution-control program be implemented? Briefly explain.

Project Cash Flows You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $400 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a three-year life. Variable costs amount to $225 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $165,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $35,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 10 percent. What will the cash flows for this project be?

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

Exercise 19-7 Part 1

1. Prepare the current-year income statement for the company using variable costing.

John is looking at several options to fund his son’s 4-year university degree.

The university fees of $45,000 a year will have be paid starting 11 years from today. He is analysing an insurance plan that pays out $45,000 a year for 4 years with the first payout 11 years from today. The insurance plan has several payment options:

Option 1
Pay $60,000 today.

Option 2
Beginning 1 year from today, pay $12,000 a year for the next 8 years.

Option 3

Beginning 1 year from today, make payments each year for the next 8 years. The first payment is $11,000 and the amount increases by 5% each year.

Answer the following questions regarding the options above:

1. (a) Calculate the present value of each option. Use a 10% discount rate.