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Longshore Drilling Company (LDC) is a contracting company that lays oil pipeline infrastructure. LDC is considering purchasing a piece of excavating equipment worth $5,000,000. The machine would generate a net $300,000 yearly pre-tax cash flows. The machine would be depreciated over the course of 20 years, at which time it is predicted to have a disposal value of $500,000. LDC’s tax rate is 20%, and the discount rate is 10%.    The Excess Present Value Index of the proposed machinery (rounded to 4 decimal places) is closest to which of the following?    Select one: a. 0.4718 b. 0.4539 c. 2.1617 d. 0.5001 e. 1.2748

Longshore Drilling Company (LDC) is a contracting company that lays oil pipeline infrastructure. LDC is considering purchasing a piece of excavating equipment worth $5,000,000. The machine would generate a net $300,000 yearly pre-tax cash flows. The machine would be depreciated over the course of 20 years, at which time it is predicted to have a disposal value of $500,000. LDC’s tax rate is 20%, and the discount rate is 10%.    The Excess Present Value Index of the proposed machinery (rounded to 4 decimal places) is closest to which of the following?    Select one: a. 0.4718 b. 0.4539 c. 2.1617 d. 0.5001 e. 1.2748

Essentials Of Investments
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
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Longshore Drilling Company (LDC) is a contracting company that lays oil pipeline infrastructure. LDC is considering purchasing a piece of excavating equipment worth $5,000,000. The machine would generate a net $300,000 yearly pre-tax cash flows. The machine would be depreciated over the course of 20 years, at which time it is predicted to have a disposal value of $500,000. LDC’s tax rate is 20%, and the discount rate is 10%. 

 

The Excess Present Value Index of the proposed machinery (rounded to 4 decimal places) is closest to which of the following? 

 

Select one:
a. 0.4718
b. 0.4539
c. 2.1617
d. 0.5001
e. 1.2748
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