Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Pensacola Cablevision Company gives television cable service to two counties in the Florida pan-handle. The firm's management is considering the construction of a latest satellite dish in December of 20x0.  The new antenna would enhance reception and the service given to customers.  The dish antenna and related equipment will cost $200,000 to purchase and install. The company's old equipment, which is fully depreciated, can be sold now for $20,000. The company's president expects the firm's enhanced capabilities to result in additional revenue of $80,000 per year throughout the dish's useful life of seven years. The incremental operating expenses related with the new equipment are projected to be $10,000 per year. These incremental revenues and expenses are in real dollars.

The new satellite dish will be depreciated beneath the MACRS depreciation schedule for the 5 year property class. The company's tax rate is 40 percent.

Pensacola Cablevision's president expects the real rate of interest in the economy to remain stable at 10 percent.  She expects the inflation rate, presently running at 20 percent, to remain unchanged.

Required:

1) find out the price index for each year from 20x1 through 20x7, by using 1.000 as the index for 20x0.

2)  Make a schedule of after tax cash flows measured in real dollars.

3) find out the next present value of the proposed new satellite dish by using cash flows measured in real dollars. Use a real discount rate equivalent to the real interest rate.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918619

Have any Question? 


Related Questions in Basic Finance

1 what is the name of the statistic used in an anova2 if

1. What is the name of the statistic used in an ANOVA? 2. If the independent variable has no effect, the calculated value of F will be around 1.00. Why?

1 why is motor carrier freight transportation the most

1. Why is motor carrier freight transportation the most preferred method of product shipment? 2. What is the economic justification for the recent rapid growth of premium package services? 3. Why is it important for a lo ...

1 describe the process of financing the construction and

1. Describe the process of financing the construction and operation of a typical real estate development. Indicate the order in which lenders who fund project development financing are sought and why this pattern is foll ...

Staton-smith software is a new start-up company and will

Staton-Smith Software is a new start-up company and will not pay dividends for the first five years of operation. It will then institute an annual cash dividend policy of $5.00 with a constant growth rate of 3%, with the ...

For each of the following operational definitions decide

For each of the following operational definitions, decide whether you consider it to be a valid measure. Explain why or why not. Decide whether you consider it to be a reliable measure. Explain why or why not. a. A resea ...

How do international factors affect decision making

How do international factors affect decision making? Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. For example, cash flows must be ...

Wiggle pools has total equity of 358200 and net income of

Wiggle Pools has total equity of $358,200 and net income of $47,500. The debt-equity ratio is .68 and the total asset turnover is 1.2. What is the profit margin?

Discussionresearch a company with an international presence

Discussion Research a company with an international presence. Describe the type of work performed; measures that the company's industry area uses for productivity; and the pitfalls and promise that the metrics provide. W ...

1 what is the goal of a media partnership2 name and

1. What is the goal of a media partnership? 2. Name and describe six basic emergency management audiences. 3. What three factors do DHS and its state and local partners need to address to improve its communications with ...

1 what is the range and why is it not ideal as an index of

1. What is the range, and why is it not ideal as an index of variability? 2. Give a definition of variance, then explain how you would calculate it. 3. How does variance differ from the total sum of squares?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen