Please solve, show work, and give detail explanation
1.
False, book value is less than salvage value
2.
True
3.
False, default risk premium
4.
=(Sales-Costs-Fixed Assets/Project Life)*(1-tax rate)+Fixed
Assets/Project Life
=(75000-46000-94000/5)*(1-35%)+94000/5
=25430
Please solve, show work, and give detail explanation Exam #2 Review Problems Chapters 9 and 6...
Please solve, show work, and give detail explanation
Exam #2 Review Problems Chapters 9 and 6 2. A firm has a new project that requires $210,600 of equipment. What is the depreciation expense in year 5 of the project is the equipment is classified as 7-year property for MACRS purposes? Year MACRS 14.29% 3 17.49% 4 12.49% 5 8.93% 24.49% 6 8.93% 7 8.93% 8 4.45% 3. A project has an operating cash flow of $33.000 per year. Initially, this...
Please solve, show work, and
give detail explanation
Exam #1 Review Problems Chapters 1, 2, 3, 4, 5, and 8 11. Prepare an amortization schedule for a three-year loan of $53,000. The interest rate is 7 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year?
Please solve, show work, and give detail explanation
11. The IRR decision rule is unreliable when comparing mutually exclusive projects. a. True b. False 12. Return on Assets (ROA) is an example of a profitability ratio. a. True b. False 13. For a given time period, the higher the interest rate, the smaller the future value. a. True b. False 14. Stockholders' Equity = Assets + Liabilities. a. True b. False 15. A disadvantage of the Average Accounting Return (AAR)...
Please solve, show work, and give detail explanation
11. The IRR decision rule is unreliable when comparing mutually exclusive projects. a. True b. False 12. Return on Assets (ROA) is an example of a profitability ratio. a. True b. False 13. For a given time period, the higher the interest rate, the smaller the future value. a. True b. False 14. Stockholders' Equity = Assets + Liabilities. a. True b. False 15. A disadvantage of the Average Accounting Return (AAR)...
Please solve, show work, and give detail explanation
1. The percentage of the next dollar you earn that must be paid in taxes is referred to as the average tax rate. a. True b. False 2. The effective annual rate (EAR) equals the annual percentage rate (APR) when interest is compounded annually. a. True b. False 3. One of the disadvantages of a corporation as a business entity is double taxation. a. True b. False 4. A highly liquid asset...
Show all work please.
True/False 7 points each. Circle the correct answer. Callable bonds have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity. True False An annuity is a series of equal payments at equal time intervals. True False Multiple Choice 5 points each. Circle the correct answer. 74. Bonds owned by investors whose names and addresses are recorded by the issuing company, and for which interest payments are made with...
Please solve, show work, and give detail explanation
2. You are considering the following two mutually exclusive projects. Find the crossover rate and determine which project should be accepted if the discount rate is 12 percent. Year Project A -$7,000 $2,500 $3,800 $2,600 Project B -$7,000 $1,400 $3,400 $4,400
Please solve, show work, and
give detail explanation
4. A firm is considering a new three-year expansion project that requires an initial asset investment of $2.7 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,080,000 in annual sales, with costs of $775,000. The project requires an initial investment in net working capital of $300,000 and the fixed asset will have a market value of $210,000 at the end of the project. If...
Please solve, show work, and give detail explanation
6. A firm offers a 6.4 percent bond with a current market price of $760.50. The yield-to- maturity (YTM) is 8.52 percent. The face value is $1,000. Interest is paid semi-annually. How many years until this bond matures? stereo 7. A bond that pays interest annually yields a rate of return of 7.5 percent. The inflation rate for the same period is 2 percent. What is the real rate of return on...
Please solve, show work, and give detail explanation
5. McGrain Golf has decided to sell a new line of golf clubs. The clubs will sell for $500 per set and have a variable cost of $200 per set. The company spent $113,000 for a marketing study that determined the company will sell 58,000 sets per year for 7 years. The marketing study also determined that the company will lose sales of 15,000 sets of its high-priced clubs. The high-priced clubs...