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Rama09 [41]
4 years ago
7

A consultant has recommended that you modernize a production line. Costs include $650,000 in equipment, a $10,000 investment in

net working capital at the time of installation, and $5,000 in delivery and installation costs. The consultant has billed the firm for $7,500 for her analysis of the project. If the project is undertaken, an employee training program costing $8,000 would be required. The old machinery has no book value but can be sold for $100,000. Your firm's marginal tax rate is 34%. What is the initial outlay associated with the project?
Business
1 answer:
asambeis [7]4 years ago
8 0

Answer:

$607,000

Explanation:

Calculation for the initial outlay associated with the project

INITIAL OUTLAY

Equipment $650,000

Delivery and installation costs

$5,000

Investment in net working capita$10,000

Employee training program$8,000

Less:Old machinery After tax sale value ($66,000)

Initial outlay $607,000

Calculation for the after sale tax value of the old machinery

After tax sale value =$100,000×(1-0.34)

After tax sale value=$100,000×0.66

After tax sale value=$66,000

Therefore the initial outlay associated with the project will be $607,000

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4 years ago
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Twelve years ago, the Archer Corporation borrowed $6,200,000. Since then, cumulative inflation has been 80 percent (a compound r
miv72 [106K]

Answer:

(a) $3,444,444.44

(b) $11,160,000

Explanation:

(a) Effective purchasing power:

= Loan amount ÷ (1 + cumulative inflation rate)

= $6,200,000 ÷ (1 + 0.80)

= $6,200,000 ÷ 1.80

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(b) Lender should be repaid:

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7 0
3 years ago
"Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account w
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Answer: the opportunity cost of $600

Explanation:

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3 years ago
With reference to the Hofstede's framework, USA is one of the most individualistic countries. Thus, he adopts ___________ plan i
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6 0
2 years ago
You are buying a home for $360,000. If you make a down payment of $60,000 and take out a mortgage on the rest at 8.5% compounded
MatroZZZ [7]

Answer:

$2954.22

Explanation:

We are given a present value of $360000 which needs to be paid in the future for the mortgage of a house therefore we are further told that $60000 of down payment has been made so now we are required to pay $300000 as monthly installments for the next 15 years so this is a present value annuity problem as we will have future regular periodic payments that for a house mortgage so firstly to interpret this information properly we will use the present value annuity to find the monthly payments which the formula is as follows:

Pv = Cx[(1 -(1+i)^-n)/i]  

where C is the periodic payment we are looking for.

Pv is the present value for the home which is $300000 as a down payment of $60000 was made.

i is the interest rate which is 8.5%/12 as we are told it is compounded monthly.

n is the number of periods the in which the mortgage payments are made which is 15 years X 12 months =180 payments.

now we will substitute in the above mentioned formula :

$300000 = Cx[(1-(1+8.5%/12)^-180)/(8.5%/12)] now we will divide both sides with what multiplies C in brackets to solve for C

$300000/[(1-(1+8.5%/12)^-180)/(8.5%/12)] = C

$2954.218674 = C now we round off to two decimal places

C= $2954.22 which will be the monthly payment for this mortgage for 15 years every month.

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