Which of the following are generally true of all bonds? A. A fall in interest rates results in capital losses for bonds whose t
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Answer:
1.
The annual net cost savings promised by the automated welding machine
Annual Costs savings in replacing 6 welders $108,000
Reduced Material costs $6,500
Total annual Costs savings = $114,500
Note there is a $3,000 annual maintenance cost that will then be taken off this savings amount to make up the Annual Net cash inflow of $111,500
2
A. The Net Present value is $72,227. Kindly refer to the attached document for the clear presentation
B. The project should be accepted because it delivers a positive NPV. Meaning the net benefit outweighs the cost of owning the new Assets.
3.
The Discounted net Cash flow for the 6 years (aside the initial outlay) is $402,227.
Annually this comes to $67,038.
The benefit the business gets in the switch to the automatic welders is approximately $67,038 annually.
Answer:
There's an error in the numbers for this question; I found the correct one and pasted it below;
"Great Lakes Steel Supply is losing significant market share and thus its managers have decided to decrease the firm's annual dividend. The last annual dividend was $1.30 per share but all future dividends will be decreased by 2.75 percent annually. What is a share of this stock worth today at a required return of 15.5 percent? "
Explanation:
Use dividend discount model (DDM) to calculate the stock price
whereby,
P0 = Current price
D0 = Last dividend paid = 130
g = growth rate = -275% or -2.75 as a decimal
r = required return = 155% or 1.55 as a decimal
Next, plug in the numbers to the DDM formula above;
Therefore this stock is worth $6.93