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Fynjy0 [20]
3 years ago
10

You are conducting a discounted cash flow analysis (DCF). You purchased an asset for $400,000 at time point zero. The asset was

depreciating using straight line depreciation over a ten year schedule. When you initially placed the asset into service, you expected the asset to have a disposal / salvage value of $0. At the end of year seven the project is suddenly cancelled due to a change in technology and the asset is sold in the open market for $110,000. Prior to this transaction, the firm was forecasted to earn $1,000,000 profit after tax in year seven and the tax rate for the firm is 20%. What is the cash flow, in time period seven, as a result of this transaction
Business
1 answer:
andrew11 [14]3 years ago
6 0

Answer: $112000

Explanation:

First, we calculate the book value in year 7 which will be:

= Depreciation × Balance life

= $400,000 × 3/10

= $120,000

Then, the cash flow as a result of the transaction will be:

= Asset sale - (Asset - Book value) × Tax rate

= 110000 - [(110000 - 120000) × 20%]

= 110000 - (-2000)

= 110000 + 2000

= 112000

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J.C. Penney Company is expected to pay a dividend in year 1 of $1.65, a dividend in year 2 of $1.97, and a dividend in year 3 of
Alchen [17]

Answer:

$71.80

Explanation:

First, calculate the present value (PV) of each year's dividend at 11% required return;

PV(of D1) = 1.65 / (1.11) = 1.4865

PV(of D2) = 1.97 / (1.11²) = 1.5969

PV(of D3) = 2.54 / (1.11³) = 1.8572

Find D4 = 2.54(1+0.08) = 2.7432

Next find Present value PV of terminal cashflows

PV(of D4 onwards) = \frac{\frac{2.7432}{0.11-0.08} }{(1.11)^{3} } \\ \\ =\frac{61.9067}{1.3676} \\ \\ = 66.8601

Add the PVs to find the current value of the stock today;

= 1.4865 + 1.5969 + 1.8572 + 66.8601

= 71.8007

Therefore, it is worth $71.80

4 0
3 years ago
A ___________ plan can help you identify steps needed to restore a failed system. business continuity disaster recovery risk man
Alex777 [14]

Answer:

Disaster recovery plan

Explanation:

Disaster recovery plan (DRP), it is a plan or approach which is structured as well as documented, states how the organization or business could resume work after the unplanned incident happen.

It is the vital part of the business as depend on the functioning of IT, it aims to resolve the loss of data and also recover the system functionality so that the could perform well after incident.

So, DRP, could help in recognizing the steps required to restore the failed system in the business.

7 0
3 years ago
Calculate Payroll An employee earns $44 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume th
Ket [755]

Answer:

The correct answer for option (a) is $3,080 and for option (b) is $2,141.

Explanation:

(a). Current pay = $44

After 40 hours, Pay = $44 × 1.5 = $66

So, we can calculate the gross pay by using following formula:

Gross pay = (40 hours × $44 ) + (20 hours × $66)

= $1,760 + $1,320

= $3,080

(b).

Security Tax = Gross pay × 6% =  $3,080 × 6% = $184.8

Medicare Tax = Gross pay × 1.5% =  $3,080 × 1.5% = $46.2

Federal Income Tax = $708

So, we can calculate the net pay by using following formula:

Net Pay = $3,080 - $184.8 - $46.2 - $708

= $2,141

3 0
3 years ago
Overcharging Medicare for care and services provided to patients is an example of Behavior
USPshnik [31]

Overcharging Medicare for care and services provided to patients is an example of abusive behavior. It's illegal to overcharge for service provided to a patient. When care is overcharged, they are absusing the system by trying to get more money out of a patient or insurance company.

5 0
3 years ago
On the day you entered college, you borrowed $30,000 from your local bank. The terms of the loan include an interest rate of 4.7
Hitman42 [59]

Answer:

The total interest paid on this student loan will be equal to:

$

Explanation:

a) Data and Calculations:

Amount of loan = $30,000

Interest rate = 4.75%

Duration of loan = 5 years

Total interest = $30,000 * 4.75% * 5 = $7,125

b) Since interest is paid annually at the end of each year, this means that $1,425 will be paid each year for 5 years.  This gives a total of $7,125 ($1,425 * 5).  As a result, we can infer that this is a simple interest payment method, because the interests are not added to the principal.  That is, the interest is not compounded.  So, the calculation is based on the simple interest formula of principal by interest rate by number of periods.

5 0
3 years ago
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