Assume everything is given in n=0, CONSTANT dollars unless otherwise stated:MTA Textile INC. is considering to invest on a computer-controlled fabric cuttingmachine. The machine's purchasing price is $150,000. The part of the initial cost ofthis investment will be paid using a $50,000 loan. The loan will be repaid in yearlyinstallment for four years at 8%. This project requires a working capital investment of$10,000 at year 0. This investment on working capital will be fully recovered afterthe project is terminated.The salvage value of this investment at the end of fourth years is expected to be$70,000. This machine will generate annual revenues of $60,000, but have annualoperating costs of $3,000. The equipment has a 30% declining balance rate for CCAcalculations. The marginal income tax rate for the firm is given as 20%. A generalinflation rate is expected to be 7%. However, the firm also expects 8% annualincrease in revenue and working capital and a 6% annual increase in operating costscaused by inflation. The firm's market interest rate is 15%Using the information above, determine the disposable tax effect (Ignore thenegative or positive sign of the answers).O a) Between $10,200 and $10,600b) None of the answers are correctOc) Between $9,400 and $9,800O d) Between $15,200 and $15,600

Option (b) is the correct answer. The following calculations are done for MTA Textiles INC. to show…

Answered: Assume everything is given in n=0,…

Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: MTA Textile INC. is considering to invest on a computer-controlled fabric cutting machin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider the basic setup of the Diamond-Dybvig (1983) model. Specifically, there are three periods, denoted t = 0, 1, 2, a single consumption good, and an illiquid investment opportunity that pays gross return 1 if liquidated at t = 1, or gross return 2.2 if liquidated at t = 2. There are 500 people in the economy, each endowed with 1 unit of the consumption good at t = 0. At t = 1, exactly 200 will randomly realize that they need to consume at t = 1 (the early consumers), the remaining 300 people will need to consume at t = 2 (the late consumers). The utility derived from consumption is 1 − (1/c1) 2 for early consumers, 1−(1/c2) 2 for late consumers, where the subscript denotes the time of consumption. Suppose a bank can offer an asset that is more liquid, with gross returns Rd 1 = 1.33 and Rd 2 = 1.71 (depending on the time of liquidation). (i) Calculate the bank’s profit after t = 2. In other words, what amount of funds remains at the bank once all depositors have withdrawn? Now…
You have been asked to decide about one of two mutually exclusive alternatives (A & B). The following table gives the initial costs, annual savings in labor costs, and the expected life of two pieces of equipment. Plot PW vs. i for each equipment on the same graph and identify the AAIRR from the graph (i for the intersection). Then, highlight the corresponding value of i in yellow in your spreadsheet. High-cost Equipment (A) Low-cost Equipment (B) Initial Cost $137,910 $100,000 Savings in Labor Costs $42,000 / year $32,000 / year Life 5 years 5 years
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A factory costs $350, 000. You forecast that it will produce cash inflows of $80, 000 in year 1, $ 140, 000 in year 2, and $220, 000 in year 3. The discount rate is 12%. a. Calcule the PV of cash inflows. (Do not round intermediate calculations. Rounds your answer to 2 decimal places.) b. Is the factory a good investment?
The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Line Item Description Machine A Machine B Machine C Estimated average income $47,060.44 $72,961.50 $73,785.60 Average investment 336,146.00 243,205.00 491,904.00 a. Machine C b. Machine A c. Machines B and C have the same preferred average rate of return. d. Machine B
TLT Ltd is considering the purchase of a new machine for use in its production process. Management has developed three alternative proposals to help evaluate the machine purchase. Only one of these proposals can be implemented. Proposals A and B both have the same cost to set up, but the output from proposal A (as measured by future net cash flows) commences at a high rate and then declines over time, while Proposal B starts at a low rate and then increases over time. Proposal C involves buying two of the machines considered under proposal B. That is, proposal C is simply Proposal B scaled by a factor of two. Proposal C results in net cash flows which are similar in magnitude to proposal A's net cash flows in the first two years. The estimated net cash flows, internal rates of return and net present values at 9% and 11% for each proposal are given in the following table. Proposal A -$290,000 $100,000 $90,000 Proposal B -$290,000 $40,000 $50,000 Proposal C -$580,000 $80,000 $100,000 End…
Orchid Biotech Company is evaluating several development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and the PV of future cash flows for the projects (all cost values are given in millions of dollars). Project Number 1 || ||| IV V O A. V, IV, I O B. V, II, III O C. IV, III, II, I Initial Capital O D. V, III, II $10 15 15 20 30 PV(CF) $10.1 19.0 Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these projects based on the profitability index? In the following choices, the priority of the projects is from high to low. 22.0 25.0 60.2
Can you help me work out question 1(a) please without having to use excel? Thank you in adv
hello, help please with B and C
不 Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and NPVs for the projects: Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project (all cost values are given in millions of dollars). a. Suppose that Orchid has a total capital budget of $60million. How should it prioritize these projects? b. Suppose that Orchid currently has 12research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects? a. Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these projects? The profitability index for Project I is (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a…