A football team got a draft pick to a two ye contract. The expected marginal revenue product of the player in the first year and second year are $1,000,000 and $1,700,00 The contracted wage is $1,300,000 in the year. The interest rate is .07 each year. The competitive wage in year 2 is expected to $1,800,000. If the team is indifferent abou
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net Present Value (NPV) is a financial tool used to evaluate the profitability of an investment or…
Q: Your storage firm has been offered $95,700 in one year to store some goods for one year. Assume your…
A: Given information: Cost : $95,200 Profits : $95,700 Cost of capital : 8.2%
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net Present Value (NPV) Net present value is defined as the summation of the present value of cash…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Initial cost = $8.07 millionCash flow= $4.91 millionNumber of years= 3 yearsDiscount rate = 8.3%
Q: nsidering leasing or buying a mower. The mower costs $1000 and can be depreciated and falls into the…
A: We first compute the written down value of the mower. Then we compare the sale price to compute the…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: IRR should be higher than the cost of capital to accept the project because the NPV will be positive…
Q: A small manufacturing company is considering purchasing a maintenance contract for air conditioning…
A: Present worth is calculated by discounting the future cost at the discounting rate. Total number…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: The profitability of the project is gauged by the NPV benefit, which is used to determine if a…
Q: Moonlight Industries just signed a sales contract with a new customer. JK will receive annual…
A: A sales contract seems to be a contract between a buyer and a seller that covers the sale as well as…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: NPV is Net present value which is the net value added by a decision. It is computed as the…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: NPV means Net present value.It is a capital budgeting technique used for making investment…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Year Cash flow0-8180000150200002502000035020000
Q: A despised football coach is scheduled to make $978,200.00 per year for the next 8 years. The first…
A: The net present value is used to find the profitability of a project by discounting future cash…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: NPV stands for Net present value, it is the capital budgeting technique used to make decision for…
Q: Wrangler Western has some of its jeans stone-washed under a contract with an independent contractor,…
A: The present worth of the machine is operating cost is the present value of all future cash outflow
Q: Your factory has been offered a contract to produce a part for a new ph your cash flows from the…
A: NPV stands for Net present value, it is the capital budgeting technique used to make decision for…
Q: You are asked to evaluate ergonomic interventions for your company based on the following…
A: Decrease in annual compensation cost: $13,060Rate of interest: 3.75%Time period: 6 years
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Here,YearValues (In million dollars)0 $ -8.141 $ 5.212 $ 5.213 $ 5.21Discount rate7.90%Part A. NPV…
Q: A basketball player is considering signing a one-year contract. If she puts in High effort, there is…
A: Introduction: A salary is an amount provided by an employer to workers on a monthly basis for work…
Q: Your factory has been offered a contract to produce a part for a new printer. Th last for 3 years…
A: Net Present Value (NPV) refers to one of the concepts from the modern techniques of capital…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net Present Value (NPV) refers to one of the concepts from the modern techniques of capital…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: The NPV of a project refers to the measure of the profitability of the project as it discounts the…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net present value(NPV) is the difference between present value of all cash inflows and initial…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net Present Value(NPV) is one of the modern techniques of capital budgeting which considers the time…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net present value (NPV) is excess of present value of cash inflows over present value of cash…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Step 1:a)The NPV rule says that the project should be accepted if its NPV is positive. If the…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Net present value (NPV) and internal rate of return (IRR) are the two most commonly used capital…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: The net present value (NPV) is one of the capital budgeting technique. The NPV is calculated by…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Given, The cash flows from contract is $4.83 million Upfront costs $8.13 million Discount rate is…
Q: Toselli Animation plans to offer its employees a salary enhancement package that has revenue sharing…
A: Annual worth distributes present worth into equivalent uniform value over its useful life.
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Given,The cash flow from the contract is $5.17 millionUpfront costs $8.17 millionThe discount rate…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: Given, The initial cost is $8.02 million Cashflows per years $4.83 million for 3 years Discount rate…
Q: Prepare a contribution format income statement that shows the expected net operating income each…
A: Pay-Back (PB) Period shows time in which investment made in any proposal is fully recovered with…
Step by step
Solved in 3 steps
- ANB Leasing is planning to lease an asset costing $210,000. The lease period will be 6 years. At the end of 6 years, the salvage value is estimated to be $30,000. The asset will be depreciated on a straight-line basis of $30,000 per year over the 6-year period. ANB's marginal income tax rate is 40%, but its average tax rate is only 31.5%. Assuming ANB Leasing requires a 12% after-tax rate of return on the lease, determine the required annual beginning of the year lease payments. a. $31,592 b. $46,120 c. $45,609 d. $52,653A firm is considering leasing or buying a mower. The mower costs $1000 and can be depreciated and falls into the MACRS 3 year class (33%; 45%; 15% and 7%). A maintenance contract will be purchased for $200 per year payable at the start of each year for 4 years. The firms tax rate is 30%. The firm expects to sell the mower for $96 at the end of the 3rd year. What is the net sale price when the mower is sold?Firm A is considering leasing equipment. The equipment will provide $2.8 million in annual pre-tax cost savings. The cost of leasing is $8.78 million and the equipment will be depreciated straight-line to zero over five years. Assume a tax rate of 21% and a borrowing rate of 7%. Firm B has offered to lease this equipment for payments of $1.95 million per year. Assume that payments for the lease are made at the start of the year. i) What is the maximum lease payment that would be acceptable to Firm A? ii) Suppose now Firm B requires Firm A to pay a $600,000 security deposit at the inception of the lease, and this amount is refunded at the end of the lease. If the lease payment is still $1.95 million. Is it advantageous for Firm A to lease the equipment now?
- ABC Co is considering either leasing or buying a new freezer unit. The unit costs $6.4 million and it qualifies for a 30% CCA rate. The unit will be valueless in four years. ABC Co can lease it for $1.92 million per year for four years. The assets pool remains open and payments are made at the end of the year. ABC faces a tax rate of 40% and can borrow at 7% pre-tax. What would the lease payment have to be for both lessor and lessee to be indifferent to the lease? $1,985,338 O $2,200,357 O $1,965,060 O $1,937,363 $2,156,357Super Sonics Entertainment is considering buying a machine that costs $445,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $121,000. The company can issue bonds at a 10 percent interest rate. If the corporate tax rate is 35 percent. Assume that lease payments occur at the end of the year Calculate the NALA company needs to decide whether to buy or lease new equipment. The equipment can be purchased for $600,000 or leased at an annual cost of $160,000. The equipment qualifies for a 30% CCA rate and has an expected life of 4 years. The salvage value is expected to be zero. The company's after-tax cost of debt is 8% and its tax rate is 20%. Lease payments would be due at the beginning of each year. Taxes are paid at the end of each year. What is the present value of the lease payments tax shield?
- Wrangler Western has some of its jeans stone-washed under a contract with an independent contractor, Almos Garment Corp. If Almos' operating cost is $38,000 per year for years 1 and 2 and then it increases by 5% per year through year 10, what is the year-zero present worth of the machine operating cost at an interest rate of 14% per year? The present worth of the machine operating cost is determined to be $A construction firm needs a new small loader. It can be purchased for $20,000. The firm expects the loader to have a salvage value of $6,000 after 7 years. The maintenance cost will be $1,400 each year. The firm's interest rate is 1% per year. Compute the Equivalent Uniform Annual Worth (EUAW).What is the payback if the investment is $22,000 and the after tax benefits are: Years 1 & 2 = $2,500 per year Years 3 & 4 = $3,500 per year Years 5 & 6 =$4,000 per year Years 7 & 8 = $4,500 per year Year 9 = $3,000 Year 10 = $1,500
- A company is deciding whether to lease or buy new equipment. The equipment can be purchased for $70,000 or leased for a 5-year period for $8,000 per year (due at the beginning of each year). The firm can borrow at 14%. The equipment has a CCA rate of 25%. Salvage value in 5 years is expected to be $4,000. The company's marginal tax rate is 33%. Calculate PV CCATS. Round the PV CCATS to 2 decimals (e.g 22.05), and the unit is $. Your Answer: Answer unitsA company has purchased a new piece of machinery for $100,000. The estimate it will result in annual cost savings of $15,000 per year, this will increase every year by $500. The machinery will last for 8 years, at which time it will be sold for $7,000. What is the company's BEFORE tax rate of return? The company estimates a federal tax rate of 21%. What is their AFTER tax rate of return?The D.J. Masson Corporation needs to raise 500,000 for 1 year to supply working capital to a new store. Masson buys from its suppliers on terms of 3/10, net90, and it currently pays on the 10th day and takes discounts. However, it could forgo the discounts, pay on the 90th day, and thereby obtain the needed$500,000 in the form of costly trade credit. What is the effective annual interest rate of this trade credit?