On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000.

Required:

1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method.

straight-line:

sum-of-the-years digits:

DDB method:

2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.

A politician claims that medical insurance companies do not cover a majority of the cost and the average patient has to pay more than $10,000 in hospital bills. Using the critical value method, test this claim at the 5% level of significance. Why might having high hospital charges be an issue for patients?

Mean= 13266.97

Standard Deviation= 12110.01

A firm can lease a truck for 5 years at a cost of $45,000 annually. It can instead buy a truck at a cost of $95,000, with annual maintenance expenses of $25,000. The truck will be sold at the end of 5 years for $35,000. The cost of capital is 15%. What is the EAC of Purchase?

A firm's cost of capital:

Select one:

a. depends on source of funds used for a project

b. is independent of firm's capital structure

c. depends on how funds are going to be spent

d. will decrease as the firm-risk increases

It is time for the renewal of existing machinery at Blackstone Ltd. New machinery will cost $95,000 and this amount can be borrowed from the local bank at 8 percent interest with annual payments at the end of the year. The CCA rate on the machinery would be 20 percent. The machinery will be salvaged in 5 years for $22,000. The current machinery is worth $12,500. Blackstone could also lease the machinery with annual lease payments of $20,000 payable at the beginning of each year, which would avoid the annual maintenance expense of $1,250 involved if they purchase the machinery. Cost of capital is 13 percent. The tax rate is 40 percent.

Should Blackstone Ltd. lease or borrow to purchase the machinery?

Identify an example company and 2 impacts on cost and 2 impacts on service for the following types of distribution networks:

-Manufacturer Storage with Direct Shipping

-Manufacturer Storage with Direct Shipping and In-Transit Merge

-Distributor Storage with Carrier Delivery

-Distributor Storage with Last-Mile Delivery

-Manufacturer or Distributor Storage with Customer Pickup

-Retailer Storage with Customer Pickup

-E-Business

XYZ Company is considering the purchase of a new machine. The machine
will cost $200,000 and is expected to last 10 years. However, the
machine will need maintenance costing $25,000 at the end of year three
and at the end of year six. In addition, purchasing this machine would
require an immediate investment of $35,000 in working capital which
would be released for investment elsewhere at the end of the 10 years.
The machine is expected to have a $15,000 salvage value at the end of
10 years. The machine will be used to generate net cash inflows of
$46,000 per year in each of the 10 years. XYZ Company has a cost of
capital of 8% and an income tax rate of 40%.

Calculate the net present value (NPV) of this machine.

Your task is to find the cost of capital (WACC) for a company. The company has three sources of capital available. The marginal tax rate for the company is 35%.

Common stock: 100 000 shares outstanding with the book value of $20 but currently trading at P/B=2.0. One may apply CAPM to estimate the cost of equity. Inputs for estimations are: risk free rate 2.8%, market risk premium 10.0% and the stock beta is 1.20.

Debt: 2 000 discount bonds with $1 000 par value, with 4 year to maturity. Bonds currently offer 6% yield to bondholders.

Preferred stock: 14 000 shares outstanding with $90 market price and 7% yield.

Find the cost of each financing source, capital structure weights for each source and the WACC.

At L's Insurance Company, a surcharge (an extra cost) is added to the insurance premium if the driver has points on his or her license. If the driver has no points, there is no surcharge. If the driver has 1 to 4 points, the surcharge is 8% of the insurance premium. If the driver has 5 to 8 points, the surcharge is 15% of the insurance premium. If the driver has 9 points, the surcharge is 18% of the insurance premium. If the driver has 10 or more points, the surcharge is 23% of the insurance premium. Write a complete Java program that includes the statements to read in the insurance premium and the number of points from the keyboard using the Scanner class. The program should then calculate the surcharge and the total cost, which is the sum of the premium and the surcharge. Use constants where applicable and format your output with System.out.printf method.

Class Name: InsuranceCost

Sample Output:

Enter insurance premium amount: #####

Enter the number of points you have: ##

Your surcharge is: $###,###.##

Your total cost for insurance is: $###,###.##