10)U.)A $20,000 investment in machinery is under consideration. The project is ex-pected to have a life of 6 years and no salvage value. The estimated annual in-come from the project is $10,000 with annual operating expenses of $4,000.The investment will be depreciated by the MACRS (GDS) straight-line methodbased on a 5-year recovery period. If a 40% income tax rate is applied with aMARR of 5%, compute the present worth on the proposed investment's after-tax cash flow under the following financial policies:The investment is provided from the firm's retained earnings.The initial investment is borrowed at 10% with repayment of interest atthe end of each period and repayment of the loan principal at the endа.b.of 5years.Repeat parts (a) and (b) for a MARR of 9%.с.

Retained earnings refer to the sum value of profits or earnings remained at a company after it has…

Answered: nvestment d on a 5-ye R of 5%, cc sh…

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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What is the daily NPV (Z) of the following credit terms? Current Terms (E) Variables Net 30 Terms (all sales are credit sales) Sales Growth Rate (g) Annual Credit Sales S1,000,000 Daily Credit Sales (S) $2,739.73 Cash Discount Offered - % (d) Customers Taking Discount - 9% p) DSO - Discount Takers (DP) DSO - Non-Discount Takers (CP) 33 Variable Cost Ratio (VCR) 75% Collection/Credit Exp (EXP) at CP 1% Bad Debt Expense Ratio (b) 2% Annual Cost of Capital 10% SE(1-dg)PE(1-be) / (1 + ¡DPE) + SE(1-pE)(1-be) / (1 + ¡CPE) - VCR (SE) ZE = - EXPE (SE) / (1 + ¿CPE)
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If EBIT=6,000; interest expense=500, t=30%, and Ks=10%, then the value of S is equal to: a) 60,000 b) 55,000 c) 38,500 d) 48,500
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6 Suppose Blooper's financials are as follows: See SPREADSHEET 9.1 Inputs Initial Investment Salvage value Initial revenue Initial expenses Inflation rate Discount rate ok Acct receivable as % of sales Investment as % of expenses Tax rate 150 Spreadsheet Name Investment 20 Salvage 150 Initial revenue 100 Initial expenses 5.0% 1.1% 1/4 15.0% 21.0% Inflation Discount rate AR Inv_pct Tax rate Calculate Blooper's working capital in each year of its project. Year Working Capital 0 1 23 4 5 6 CO
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Question 26 Consider the following data: D1-$1.55: Po-$49.50. g-3.70% (constant), and F-2.00%. What is the cost of equity raised by selling new common vock? O a. 9.90% Ob.6.90% O c. 10.90% O d. 8.90% O e. 8.83%
TIPS Capital Return Consider a 6.00% TIPS with an issue CPI reference of 184.40. At the beginning of this year, the CPI was 191.50 and was at 201.20 at the end of the year. What was the capital gain of the TIPS in percentage terms? (Do not round the intermediate steps. Round your final answer to 2 decimal places.) A)5.07% B)4.82% C)7.10% D)9.70%
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nvestment d on a 5-ye R of 5%, cc sh flow un The invest