Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Basic Finance Expert

Klaatu Co. has recently completed a $300,000, two-year marketing study. Based on the results. Klaatu has estimated that 10,000 of its new RUR-class robots could be sold annually over the next eight years at a price of $10,115 each. Variable costs per robot are $7,900; fixed costs total $11.7 million per year. Starts up costs include $41 million to build production facilities, and 9 million in net working capital. The $41 million facility is made up of a building valued at 6 million that will belong to CCA class 3 (rate is 5%) and $35 million of manufacturing equipment (belonging to CCA class 8 with rate of 20%). At the end of the project`s life, the facilities will be sold for an estimated $10.1 million, assuming the building`s value will be $4 million and net working capital will be recovered .When this project is over, there will still be other assets in the CCA class. Klaatu pays taxes at a 37% and uses a 15.5 percent discount rate on projects such as this one. Should Klaatu produce the RUR-class robots?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M940494

Have any Question?


Related Questions in Basic Finance

Risk versus ambiguitya define each of the concepts risk and

Risk versus ambiguity a. Define each of the concepts risk and ambiguity (sometimes called Knightian uncertainty). b. Provide a simple example that incorporates risk in monetary payoffs but not ambiguity. c. Describe a si ...

Certain financial ratios for elizabeth arden for its most

Certain financial ratios for Elizabeth Arden for its most recent year below, along with the average ratios for its industry. Based on those ratio a. Does Arden seem to prefer to finance its assets with debt or with equit ...

Suppose that a mutual fund that tracks the sampp has mean

Suppose that a mutual fund that tracks the S&P has mean E(Rm) = 16% and standard deviation σm = 10%, and suppose that the T-bill rate Rf = 8%. Answer the following questions: (a) What is the expected return and standard ...

The conversion price of a 100 par convertible preferred

The conversion price of a $100 par convertible preferred stock is $25. If this convertible has a conversion value of $64 per share, What is the common stock price?

Tapley dental supply company has the following datanet

Tapley Dental Supply Company has the following data: Net Income = $240 Sales = $10,000 Total assets = $6,000 Debt ratio = 75% TIE ratio = 2.0 Current ratio = 1.2 BEP ratio = 13.33% If Tapley could streamline operations, ...

Zero-coupon bonds with a par value of 1000000 have a

Zero-coupon bonds with a par value of $1,000,000 have a maturity of 10 years and a required rate of return of 9 percent. What is the current price?

Please show work ex formula etcyou are given the following

Please show work ex: formula, etc. You are given the following cash flow information. The appropriate discount rate is 6 percent for Years 1-4 and 7 percent for Years 5-10. Payments are received at the end of each year. ...

Question - to put it into practice ii a call option on

Question - To put it into practice II A call option on Canadian dollars with a strike price of $.60 is purchased by a speculator for a premium of $.06 per unit. Assume each option calls for the delivery of 50,000 CAD. If ...

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

What are some best practices that can be offered with

What are some best practices that can be offered with respect to scheduling and network diagramming

  • 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

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As