AZ Products is looking into buying a computer for $218,000, it will be depreciated straight-line to zero over 5 years. It will be worth $20,000 at the end of 5 years. The company will save $73,500 before tax per year in order processing cost and will reduce inventory by $18,600 on day 1. AZ Products has 140,000 shares of common stock outstanding at a market price of $27 a share. Next year's annual dividend is expected to be $1.43 a share and the dividend growth rate is 2 percent. The company also has 2,500 bonds outstanding with a face value of $1,000 per bond. The bonds have a pretax yield of 7.35 percent and sell at 98.2 percent of face value. The company's tax rate is 21 percent. should the company buy the computer?
AZ Products is looking into buying a computer for $218,000, it will be
AZ Products has 140,000 shares of common stock outstanding at a market price of $27 a share. Next year's annual dividend is expected to be $1.43 a share and the
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