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 forces have been driving the increased

1. What forces have been driving the increased internationalization of business? 2. Explain the different orientations to international business that can be found among executives. 3. What are the various situations in w ...

Find the present value of an ordinary annuity with deposits

Find the present value of an ordinary annuity with deposits of $8680 quarterly for 5 years at 8.4% compounded quarterly. What is the present value?

A uk-based multinational company has sold an overseas

A UK-based multinational company has sold an overseas chemical plant, the price for the plant being determined by an earn-out agreement. The amount of the receipt under the agreement is likely to be $10m, with a maximum ...

1 when preparing a personal statement of financial

1. When preparing a personal statement of financial condition, should assets and liabilities be presented on the basis of historical cost or estimated current value? 2. In a personal statement of financial condition, wha ...

A student remarks 135000000 shares of general electric were

A student remarks: "135,000,000 shares of General Electric were sold yesterday on the New York Stock Exchange, at an average price of $15 per share. That means General Electric just received a little over $2 billion from ...

Household budgetshould be in apa writing style1 create a

Household Budget Should be in APA writing style. 1. Create a simple household budget, including all income and expenses. There are various templates available online to help you do this. Find one that you feel comfortabl ...

In 2013 the lissa company paid dividends of 10000000 on

In 2013, the Lissa Company paid dividends of $10,000,000 on after-tax income (cash flow) of $25,000,000. Capital budget projects totaled $15,000,000 in 2013.   2013 was a normal year for earnings, dividends, and capital ...

1 discuss the rationale and risks associated with using a

1. Discuss the rationale and risks associated with using a common forecast to drive the firms planning/coordination flow. 2. Discuss the role of the CRM system in enhancing the firms competitiveness. 3. Discuss how advan ...

1 affordable payments what should you consider when

1. Affordable Payments. What should you consider when determining an affordable down payment and monthly mortgage payments? 2. Selection Criteria . List the criteria you should use when selecting a home. 3. Selection Cri ...

The portfolio manager at rbc direct investment is

The portfolio manager at RBC Direct Investment is requesting your assistance to analyze and recommend a stock for their high value clients. These high value clients would only consider "Green Finance" companies. Green fi ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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