Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: Fabulous Fashions is thinking to purchase of computerized clothes designing software. The software is expected to cost dollar 160,000, have a useful life of five (5) years, and have zero salvage value at the end of its useful life. Suppose tax regulations permit the depreciation patterns for this asset:

Year

Percent Deductible

1

20

2

32

3

19

4

15

5

14

The company's tax rate is 30% & its cost of capital is 8%. The software is expected to generate cash savings and cash expenses:

Year

Cash Savings

Cash Expenses

1

$61,000

$9,000

2

67,000

8,000

3

72,000

13,000

4

60,000

9,000

5

48,000

5,000

[A] Make a time line presenting the after-tax operating cash flows
[B] Determine the following on an after-tax basis; payback period, net present value, profitability index and internal rate of return.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M921358

Have any Question? 


Related Questions in Basic Finance

Instructions-1 need detailed answers2 long term financial

Instructions- 1. Need detailed answers 2. Long term financial plan should be 5 years 3. Revenue costs include stuff like salary 4. I need to submit it in turnitin so make sure no one submits it 5. Anything not clear ask ...

1 why should a firms ability to use tax credit affect its

1). Why should a firm's ability to use tax credit affect its capital structure? 2). Briefly describe our three-step approach to the dividend decision. 3). (a). Describe the difference between secured and unsecured debt. ...

Questionsuppose there are 3 stocks with the same expected

Question: Suppose there are 3 stocks with the same expected return of 10% per year and the same risk (standard deviation) of 50%. The correlation between any 2 of them is 0.5. 1) What is the risk of equal-weighted portfo ...

Individual or component costs of capital your firm is

(Individual or component costs of capital) Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm fo ...

What is the difference between holding a short call and a

What is the difference between holding a short call and a long put position? Does one of these positions results in an obligation on the part of the holder?

Suppose you borrow 300000 at 7 for 30 years with 0 points

Suppose you borrow $300,000 at 7% for 30 years with 0 points. Suppose also that the mortgage note includes a prepayment penalty of 1% of the mortgage balance if the mortgage is prepaid within 10 years. What is the effect ...

Investmentsinstructions for asset returns paperstep 1

Investments Instructions for Asset Returns Paper Step 1 Extending Siegel (1992) graphs to 2014 This section uses the file "AssetHistoricalReturns" to replicate and extend Siegel (1992) results to 2014. 1. Create a chart ...

Which of the following statements about the linear

Which of the following statements about the linear regression of the return of a portfolio over the return of its benchmark presented below are correct? Portfolio Parameter Value Beta 1.25 Alpha 0.26 Coefficient of deter ...

A stock is currently selling for 39 per share a call option

A stock is currently selling for $39 per share. A call option with an exercise price of $45 sells for $3.47 and expires in three months. If the risk-free rate of interest is 4.6 % per year, compounded continuously, what ...

The hartnett corporation manufactures baseball bats with

The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez's autograph stamped on them. Each bat sells for $35 and has a variable cost of $22. There are $97,500 in fixed costs involved in the production pro ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate