Assume ABC Company has chosen to invest in new manufacturing equipment. The initial cost of the equipment is $1,200,000. The equipment has a useful life of 20 years. The company uses straight-line depreciation. Their tax rate is 30%. Their weighted average cost of capital is 10%. The new equipment is expected to increase net cash flows by $500,000 in year 1, $350,000 in years 2 through 4, and $100,000 in years 5 through 10. Using all four investment assessment methods (IRR, ARR, NPV, or payback), perform the calculations for this project. Based on just ONE of your calculations should the project be accepted or rejected? Critique the results of the other three calculations you completed. Do they all support your accept/reject decision? Which assessment method is the best? The yearly cash flow is ATCF

Corp is planning to issue a stock to finance a new operations facility, the projected cost of the facility is $278 million, additional flotation costs are $1 million and the underwriter's fee is 7% What will be the size of the stock offering? How many shares of stock can they issue if the stock sells for $80 per share?

You expect that you will need to replace your furnace in 5 years at a cost of $15,729. How much must you save today in an account that pays 3.42% APR (compounded monthly) to exactly pay the $15,729 in 5 years?

Use MM theory to explain the effect of capital structure on the equity cost of capital and WACC a) in perfect markets; and b) when corporate tax exists. (No calculation is needed.)

people with a higher opportunity cost of time are more willing, ceteris paribus, to pay a higher money price for goods that save time than people with a lower opportunity cost of time. First, provide an example of a product where an important part of the true cost of the product is the time price. Can you think of something that seems to be a bargain at first because of its low money price, but that isn't as much of a bargain when you consider both the money price and the time price of the good? Can you think of an example of a new good or service being offered that reduces the time price of a good while charging a higher money price? Are there any opportunities for mutual gain or an increase in societal utility if someone with low opportunity cost of time provides a service (e.g., waiting in line) for a person with a higher opportunity cost of time?

A central air conditioning unit was installed on January 1, 2000 at an initial cost of
P650,000 and was expected to have a salvage value of P50,000 after a life of 7 years. a.
What amount of depreciation had accumulated in a sum-of-the-years’-digit method at the
end of 2003? b. Using the declining balance method, determine the depreciation charged
for 2004 and the book value at the end of 2004. c. If the equipment was sold on Jan 1,
2005 for P100,000, what amount of loss would result from this sale if sinking fund method
was being used with interest of 12% per year?

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