4Landman Corporation (LC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of 63. It'sconsidering building a new $65.3 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $7.89million in perpetulty. There are three financing options:a. A new issue of common stock. The required return on the company's new equity is 15.3 percent.b. A new issue of 20-year bonds. If the company issues these new bonds at an annual coupon rate of 7.4 percent, they will sell at parc. increased use of accounts payable financing Because this financing is part of the company's ongoing daily business, the companyassigns it a cost that is the same as the overall firm WACC Management has a target ratio of accounts payable to long-term debt of11. (Assume there is no difference between the pretax and aftertax accounts payable cost)If the tax rate is 23 percent, what is the NPV of the new plant?Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer indollars, not millions of dollars, rounded to 2 decimal places, e.g.. 1,234,567.89.Net present value

Net present value (NPV):Net present value (NPV) is a financial metric used to evaluate the…

Answered: If the tax rate is 23 percent, what is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Solve it correctly please. I will rate accordingly . How much does a machine cost if you can sell it in P560,425.00 after three years and produce an annual income of P12,500.00 with a MARR of 9%? draw the figure and round the answer to three decimal places
Company X is considering two investment options. Both options require an investment-$400,000. Option 1: Expected rate of return - 12.0%, tax rate - 20.0 % Option 2: Expected rate of return - 9.0%, tax rate - 25.0% Compute the DIFFERENCE in before tax income between the two options O Option 1 exceeds Option 2 by $14,000 O Option 1 exceeds Option 2 by $12,000 None of the other answers are correct exceeds Option 2 by $10,000 O Option 1 O Option 2 exceeds Option 1 by $10,000
A 180. Subject:- finance
You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars): Years from Now After-Tax CF 0 −$ 22 1 to 10 $ 10 The project's beta is 1.6. Assuming rf = 5% and E(rM) = 15% Required: a. What is the net present value of the project? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What is the highest possible beta estimate for the project before its NPV becomes negative? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
5.2 REQUIRED Study the information provided below and answer the following questions. Ignore taxes. 5.2.1 Compute the Net Present Value. Your answer must include the calculations of the present values as well as the net present values. 5.2.2 Should the new machine be considered for acceptance? Why? 5.2.3 Calculate the Internal Rate of Return (expressed to two decimal places) if the machines have no scrap/resale value. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION Vendit Limited is looking at the possibility of investing in fifty vending machines. The machines would cost R800 000, and its cash operating expenses would total R510 000 per year. The machines are expected to have a useful life of five years. At the end of five years, the machines would be sold for R160 000. On the benefit side, it is estimated that the machines would generate cash revenues of R760 000 per year. The cost…
Suppose you sell a fixed asset for $115,000 when it's book value is $135,000. If your company's marginal tax rate is 21%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
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Calculate it manually, not in excel. Show complete solution and formula used. Please don't type the solution. Write it in a piece of paper.
A mini-mart needs a new freezer and the initial investment will cost $432,427. Incremental revenues, including cost savings, are $189,494, and incremental expenses, including depreciation, are $30,950. There is no salvage value. What is the accounting rate of return (ARR)? Round the nearest whole percent, no decimal places.
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Crane Company is considering an investment that will return a lump sum of $930,000 6 years from now. Click here to view the factor table. What amount should Crane Company pay for this investment to earn an 9% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 25.25.) Crane Company should pay $
Use the following information of the next 4 questions: Clayton Enterprise considers investing a total of $40,000 in Al automation. • This $40,000 will be 100% depreciated over the three-year life of the project. • The project will require an initial $10,000 investment in NWC and the tax rate is 20%. • At the end of the project's life, the fixed assets will be worth $20,000, and Clayton Enterprise will recover $8,000 that was tied up in working capital. • The OCF for the next 3 years is $32,000. Calculate the CFFA in Yr 0 O-40000 O-70000 O-60000 O-30000 -50000 Show Transcribed Text Calculate the CFFA in Yr 3: CFFA3 O 59000 O 57000 O 54000 O 56000 O 55000 O 58000

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If the tax rate is 23 percent, what is the NPV of the new plant? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89. Net present value