depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million per year before tax and has additional annual costs of $600,000. The Marginal Tax rate is 35% (Argosy, 2012). We must first start by finding the Depreciation of this project, In order to obtain this we will use the formula: Depreciation = Cost of the asset – salvage value/ Life of the asset. We know that we have no salvage value, so we divide the cost of asset by life
Words: 1552 - Pages: 7
Question 1(a) To be listed on a recognized stock exchange, a company must go through an initial public offering (IPO) ，which is the first sale of stock by the company to the public. Private listed companies or small firms that are planning to expand the growth of their company often use an IPO as a way to generate and raise the capital needed for their company expansion. Although further expansion is beneficial to the company and its shareholders, there are both advantages and disadvantages that
Words: 3360 - Pages: 14
Management and Economics 2010/2011 (Spring Semester) Prof. Miguel Ferreira Dr. João Filipe CIMSPA 1st QUESTION [GROUP 45] Hélia Lopes, 9056 | Jean Rafael, 10402 | Marta Costa, 9475 Marta Soares, 8624 | Miguel Melo, 8878 EXECUTIVE SUMARY: The present report will study the feasibility of an investment opportunity by Cimspa consisting on the expansion of its production process to Angola. In the following analysis we used forecasts previously obtained. Additional relevant information on market data
Words: 6672 - Pages: 27
provided in the text in Chapter 11, Table 11-2.) Easy: Investment outlay Answer: c Diff: E [i]. The Target Copy Company is contemplating the replacement of its old printing machine with a new model costing $60,000. The old machine, which originally cost $40,000, has 6 years of expected life remaining and a current book value of $30,000 versus a current market value of $24,000. Target's corporate tax rate is 40 percent. If Target sells the old machine at market value, what is the initial after-tax
Words: 3814 - Pages: 16
.................................................................................................................... 3 Operational Cash-Flows ………………………………………………………………………………………………6 Free Cash-Flows ………………………………………………………………………………………………………… 7 Net Present Value ……………………………………………………………………………………………………… 7 Internal Rate of Return ………………………………………………………………………………………………. 7 Profitability Index……………………………………………………………………………………………………… 8 Question 2 ……………………………………………………………………………………………………………………………… 8 Question 3 ………………………………………………………………………………………………………………………………
Words: 2612 - Pages: 11
management and the board of Pioneer Petroleum Corporation was the determination of a minimum acceptable rate of return on new capital investments, The company’s basic capital budgeting approach was to accept all proposed investments with a positive net present value when discounted at the appropriate cost of capital. At issue was how the appropriate discount rate would be determined. The company was weighing two alternative approaches for determining a minimum rate of return: (1) a single cutoff rate based
Words: 1497 - Pages: 6
interests of managers and shareholders. This can be accomplished through: • Compensation plans tied to the performance of the firm (assuming of course that the reporting of the numbers is not fraudulent!). It is best is performance is measured by stock value or other cash flow measure. • The Board of Directors oversees management and can fire them -problems with the board of directors lack of independence arises here. Oftentimes the Board and top management are part of (as they call it) “the old-boy
Words: 1977 - Pages: 8
including appendices but excluding quizzes, practical questions, challenge questions, and mini-cases. Therefore, the questions have been sorted according to chapters in the Brealey, Myers and Allen textbook. On the last paper you will see the following table for each question Question XX A) B) C) D) IMPORTANT: Answer each question by putting an X in one and only one of the boxes, e.g. Question XX A) X B) C) D) Then it is clear for you and the examiner how you have answered the question. You are not
Words: 2481 - Pages: 10
The Suntory and Toyota International Centres for Economics and Related Disciplines Short and Long Rates of Interest Author(s): F. Lavington Reviewed work(s): Source: Economica, No. 12 (Nov., 1924), pp. 291-303 Published by: Blackwell Publishing on behalf of The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines Stable URL: http://www.jstor.org/stable/2548108 . Accessed: 17/04/2012 02:53 Your use of the JSTOR
Words: 6309 - Pages: 26
Business Decision Making Introduction Decision making is one of the very important tasks that we all have to do in every now and then. And when it is in terms of business then it makes a lot of sense incorporated with a lot of values as well as importance. Whether an organization succeed or fail this all depends on the effective decision making. Valid information & expertise plays a vital role to make good decisions. If decision is great we get good outcomes and the result is actually vice
Words: 3806 - Pages: 16
