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Brut [27]
2 years ago
9

An company buys a color printer that will cost $18,000 to buy, and last 5 years. It is assumed that it will require servicing co

sting $500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 12%? A. -$3983 B. -$4002 C. -$4957 D. -$5493
Business
1 answer:
Anna [14]2 years ago
5 0

Answer:

The correct answer is option (D)

Explanation:

Solution

Given that:

The present value of equity factor for 5 years at 12% discount are = 3.60478

Then,

The present value of servicing costing = -$500 * 3.60478 = -$1802.39

Thus,

The present value of cost to buy =- $18000

The total Present value = -18000 + 1802.39 = -$19802.39

So,

The equivalent annual annuity = total Present value / present value of equity factor

= -$19802.39 / 3.60478

= -$5493.37

Therefore, the equivalent annual annuity of this deal is -$5493.37

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Rumolt Motors has 24 million shares outstanding with a price of $ 13 per share. In​ addition, Rumolt has issued bonds with a tot
eduard

Answer:

WACC without taxes         =   6.84% (rounding up to two decimals)

WACC with a tax rate of 21%=   6.27% (rounding up two decimals)

Explanation:

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

To calculate WACC we need to know the weight's for equity adn debt:

Equity: 24,000,000 x 13 = 312,000,000

Debt 368,000,000

Value: 680,000,000

Debt weight's 368M/680M = 0.458823529

Equity weight's 312M/680M =0.541176471

Now we have he weights can calculate the WACC

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.09

Equity weight 0.458823529

Kd 0.05

Debt Weight 0.541176471

t 0 (as this is a pretax, tax is zero)

WACC = 0.09(0.458823529411765) + 0.05(1-0)(0.541176470588235)

WACC 6.83529%

then, for b we are asked for a 21% tax rate, everything else remains unchanged:

if t = 21% then:

t 0.21

WACC = 0.09(0.458823529411765) + 0.05(1-0.21)(0.541176470588235)

WACC 6.26706%

3 0
3 years ago
The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25
Andreyy89

Answer:

$25

Explanation:

Since there is an available capacity of 5,000 units so in this case, the minimum transfer price which should be accepted is equal to the variable cost per unit i.e $25 and the same is to be considered as it is enough to cover its variable production cost  

Therefore, all the other information which is given in the question is not relevant. Hence, ignored it  

6 0
2 years ago
At the recent school board​ meeting, five individuals spoke on both the merits and problems with​ full-day kindergarten as compa
saul85 [17]

Answer:

defensive listening

Explanation:

Defensive listening happens when an individual hears an apparently innocent commentary and takes it as a personal attack against himself/herself or their beliefs. Many times defense listening is caused because the individual constantly believes that other people are judging them or their ideas.

In this case, Corrine was offended by a commentary that was not intended to be a personal attack, but rather an opinion on a specific topic. Probably Corrine feels strongly against the idea of full-day kindergarten and that is why she felt attacked by a different opinion.

4 0
3 years ago
National Storage issued $90 million of its 10% bonds on April 1, 2018, at 99 plus accrued interest. The bonds are dated January
Ahat [919]

Answer:

The total amount of cash  received is $91,350,000

Explanation:

The amount of cash proceeds realized from the bond issuance is the 99% of face value of $90 million plus the coupon interest due from January 2018(date of the bond) to April 1 ,2018(the date of bond issuance),that is three months of coupon interest payment.

The bond proceeds is computed as below:

Discounted bond price 99%*$90,000,000            =$ 89,100,000

Three months of interest 10%*$90,000,000*3/12   =$2,250,000

Total amount received from bond issue                    $91,350,000

3 0
3 years ago
Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payme
mezya [45]

Answer: a. $120,000

b. $6,000

c. Yes

Explanation:

a. It is said that the collection centres would help reduce the collection time by 2 days and that every day $60,000 comes in.

If the proposal will reduce the amount of time taken to collect by 2 days then that means that the amount freed up is the amount that they would have collected in two days had it not been for the system.

That amount would be,

= $60,000 * 2

= $120,000

b. If they used this free up cash to pay off a debt that was accumulating 5% per year then the 5% will be saved.

The amount saved therefore is,

= 120,000 * 5%

= $6,000

By retiring a $120,000 that was accruing $6,000 a year, the proposal has enabled that $6,000 to be saved instead.

c. The cost of implementing this proposal is $5,200 per year and yet the savings it gives in interest is $6,000.

As the savings are higher than the cost, the number definitely suggest that the project should be implemented because it is more beneficial than it costs.

8 0
3 years ago
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