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Over [174]
3 years ago
11

(Ignore income taxes in this problem.) Clairmont Corporation is considering the purchase of a machine that would cost $150,000 a

nd would last for 5 years. At the end of 5 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $37,000. The company requires a minimum pretax return of 12% on all investment projects.
The present value of the annual cost savings of $37,000 is closest to:________.
a) $133,385
b) $235,070
c) $185,000
d) $20,979
Business
1 answer:
djverab [1.8K]3 years ago
4 0

Answer:

a) $133,385 

Explanation:

Present value is the sum of discounted cash flows.

Present value can be calculated using a financial calculator:

Present value each year from year 1 to 5 = $37,000

I = 12%

NPV = $133,385 

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

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Explanation:

Exchange rate:

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3 years ago
Upper management is considering using a biodegradable packaging which costs $5 more per unit but it produces less waste in the l
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Answer:

Check the explanation

Explanation:

Please the answer to this question is in the attached file

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4 0
3 years ago
Sweet Acacia Industries reported income taxes of $339,324,400 on its 2017 income statement and income taxes payable of $274,010,
S_A_V [24]

Answer:

$50,153,400

Explanation:

The formula is to increase the income tax expense for the year by any decrease in income tax payable or decrease income tax expense by any increase in income tax payable for the year

Step 1: Calculate the Increase/Decrease in Income tax payable from 2016-2017

=Income tax Payable for 2017= $563,181,600

Income tax Payable for 2016= $274,010,600

=563,181,600-274,010,600= $289,171,000 - This represents an increase in income tax payable from 2016-2017

Step 2: Decrease the Reported Income Tax by the Increase in Income Tax payable as calculated in Step 1.

= $339,324,400-$289,171,000= $50,153,400

Cash Payments made for Income Taxes During 2017 is $50,153,400

5 0
3 years ago
Help-. You and a friend are designing and selling artisan smartphone covers. The covers are decorated with tiny manufactured rhi
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I believe it would be capital.  You have to invest in the jewels to complete the cases.
8 0
3 years ago
firm has 2,000,000 shares of common stock outstanding with a market price of $2 per share. It has 2,000 bonds outstanding, each
Yuki888 [10]

Answer:

A Firm

The firm's WACC is:

= 12.16%

Explanation:

a) Data and Calculations:

                                              Common               Bonds

                                                  Stock

Outstanding shares/bonds  2,000,000              2,000

Market price per unit                $2                     $1,200

Total market value             $4,000,000   $2,400,000

Total value of debt and equity = $6,400,000

Weight                                      62.5%                37.5% ($2,400/$6,400*100)

Cost of bonds (coupon rate) = 10%

Tax rate = 34%

Firm's beta = 1.5

Risk-free rate = 5%

Market risk premium = 7%

After-tax cost of bonds = 6.6% (1 - 0.34) * 10%

Cost of common stock =

Risk Free Rate + Beta x (Market Return - Risk Free Rate)

= 5% + 1.5 x (7%)

= 5% + 10.5%

= 15.5%

WACC = 15.5% * 62.5% + 6.6% * 37.5%

= 0.096875 + 0.02475

= 0.1216

= 12.16%

7 0
3 years ago
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