What will be the annual cash outflows for Mimi Inc. if it leased a milling machine for $8, 200 per year for 5 years. Assume that the new machine cost $42,000 and will depreciate on a straight line basis over the 5 years and that Mimi has a tax rate of 32 percent.Question 15Select one:a.- $5,576b.$42,000C.-$8,264d.$33,800e.- $2,688

To determine the annual cash outflows for Mimi Inc., given the leasing and depreciation costs,…

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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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Exercise 4 Complete the last four columns of the table below using an effective tax rate of 40% for an asset that has a first cost of 20,000 QAR and a 3-year recovery period with salvage value of 2,000 using straight line depreciation. All cash flows are in 1,000 units.
One of your company's clients has proposed a contract offering an estimated $150,000 in net profits for the next six years; however, your company would be required to invest $585,000 today to acquire the needed resources for the project. Determine whether the project should be accepted if the cost of capital is a. 10% b. 13% c. 16%
7 A firm’ management is planning to replace an old machinewith a three year remaining life and $5,000 per year depreciation by a new machine. The new machine costs $27,000. The depreciation expense on the new machine would be $9,000 per year. By using the new machine, expenses (excluding depreciation) will reduce from $55,000 to 40,000 per year. Assume a tax rate of 40 percent. What are OCF of each alternative (old-new machine)? What are relevant cashflows? (Assume that the change in the machine does not affect existing revenue of $100,000). Thank you.
Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Colby Hepworth has just invested $550,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. b. Kylie Sorensen has just invested $1,580,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $790,000, $490,000, and $300,000. c. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. d. Rahn Booth invested $1,350,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. Required: 1. What is the payback period for Colby? Round your answer to two decimal places. years 2. What is the payback period for Kylie? Round your answer to one decimal place. years 3. How much did Carsen invest in the project? 4. How much cash does Rahn receive each year? per…
2. You plan on buying a bottling machine for $2 million, which can be salvaged for $400,000 in 8 years. Your tax rate is 43% and the CCA rate is 30%. Your cost of capital is 13%. What is present value of the CCA tax sheild? (Answer: E) a. $338,447 b. $378,521 c. $422,781 d. $458, 402 e. $520,348
Vishnu
27
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Suppose that the marginal tax rate is 15%. If a farmer decides to purchase a combine it will increase his revenue by $6,000 per year, but it will also increase his expenses by $1,000 per year. The before tax rate on this investment is 25%. The life of this investment is 6 years. What is the present value of the after tax net return? $14,133 $12,544 $16,084 $13,706 None of the answers are correct
Give typing answer with explanation and conclusion

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