2) Kwik-E-Mart, Inc. is considering the purchase of a $500,000 computer that has an economic life...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
2) Kwik-E-Mart, Inc. is considering the purchase of a $500,000 computer that has an economic life of 5 years. The computer falls into the MACRS 5-year class and will be sold in 5 years for $100,000. The use of the computer will save five office employees whose combined annual salaries are $120.000 (don't worry, Apu will keep his job). It also contributes to lower net working capital by $100,000 when they buy the computer. The net working capital will be recovered at the end of the project. The corporate tax rate is 34%. Is it worthwhile to buy the computer if the appropriate discount rate is 12%? Use the internal rate of return method. 2) Kwik-E-Mart, Inc. is considering the purchase of a $500,000 computer that has an economic life of 5 years. The computer falls into the MACRS 5-year class and will be sold in 5 years for $100,000. The use of the computer will save five office employees whose combined annual salaries are $120.000 (don't worry, Apu will keep his job). It also contributes to lower net working capital by $100,000 when they buy the computer. The net working capital will be recovered at the end of the project. The corporate tax rate is 34%. Is it worthwhile to buy the computer if the appropriate discount rate is 12%? Use the internal rate of return method.
Expert Answer:
Related Book For
Financial Analysis with Microsoft Excel
ISBN: 978-1285432274
7th edition
Authors: Timothy R. Mayes, Todd M. Shank
Posted Date:
Students also viewed these finance questions
-
Scott Investors, Inc., is considering the purchase of a $360,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method....
-
Nata, Inc., is considering the purchase of a $540,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market...
-
RightPrice Investors, Inc., is considering the purchase of a $415,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line...
-
In the United States, a principal responsibility for preserving endangered species (e.g., a pair of endangered birds that chooses to nest on private land) and the costs of exercising that...
-
Which, if any, of the following compounds can be prepared by an acetoacetic ester synthesis?Explain. (a) Br. (c) (b) CH CH - CH
-
Draw the B.M. and S.F. diagrams for the beam shown in Fig 15.41 20kN.m B 11 1m 3m 1m Fig. 15.41 20kN.m
-
On its books, Navarro Companys Cash account shows an ending balance of \($770\). The bank statement for the current period shows a \($20\) service charge and an NSF check for \($100.\) A \($250\)...
-
During August 2014, Packer Manufacturing had the following cash receipts and disbursements: Cash received from customers .......... $319,000 Cash received from selling equipment ....... 11,200 Cash...
-
2. [10 marks] NewCo Software Company is building a new application. The table below summarizes the major activities in the project. As the company is a startup, employees can perform any function:...
-
The G. Saussy Manufacturing company is putting out four new electronic components. Each of Saussy's four plants has the capacity to add one more product to its current line of electronic parts. The...
-
Vega has a large eCommerce business. It sells through Amazon, DTC, and eTailer.com. For each of the 3 ways, tell me briefly how Vega might sell through the 3 different eCommerce types
-
It was May 2017 when Neeraj Kumar, the owner of Kumar Food Corporation (KFC), held a brainstorming session with his marketing and sales team to find ways of increasing the value of his company to...
-
What technology would you use to assure consistent delivery of the training message in every restaurant every time it is given, and why. Assume the maximum training time per topic is 10 minutes and...
-
II. What Do the Experts Say? 4 3. According to the automotive engineer, what two quantities will you need to compare in order to decide whether the driver could have prevented the accident? According...
-
Safety at Petro-Plus Quick Stop Camilla Conrad has been employed for just over four years as a server at the Petro-Plus Quick Stop( PPQS ) restaurant in Kentville Nova Scotia. PPQS gets extremely...
-
a. Journalize the entries to record (1) The declaration of the dividend, capitalizing an amount equal to market value, and (2) The issuance of the stock certificates. b. Determine the following...
-
3.4 A vendor builds multiple types of tablet computers. Each type has a type identification number and a name. The key specifications for each type include amount of storage space and display type....
-
Determine the reactions in supports A and D and connections B and C. Sketch its shear and moment diagram and determine the magnitude ankoration of the maximum shear and moment for every member. 18 3...
-
A stock's beta coefficient can be calculated using the following equation: B- = ^2 Vi, a. Write a user-defined function that can calculate the beta coefficient. The arguments to the function should...
-
Chicago Turkey is considering a new turkey farm to service its western region stores. The stores currently require 650,000 turkeys per year, and they are purchased from various local turkey farms for...
-
Using the Yahoo! Finance Web site (finance.yahoo.com) get the current price and five-year dividend history for PPG Industries, Inc. (NYSE: PPG). Use the same procedure as in the Internet Exercise of...
-
Solve Problem 8.73 using the Rayleigh-Ritz method with the mode shape \[U(x)=c_{1} \sin \frac{\pi x}{2 l}+c_{2} \sin \frac{3 \pi x}{2 l}\]
-
Using Program \(12 . \mathrm{m}\), solve Example 8.4. Data From Example 8.4:- Find the natural frequencies of a bar with one end fixed and a mass attached at the other end, as in Fig. 8.9.
-
Using MATLAB, plot the dynamic response of the plucked string, Eq. (E.6) of Example 8.1, at \(x=l / 2\). Data: \(h=0.1 \mathrm{~m}, l=1.0 \mathrm{~m}, c=100 \mathrm{~m} / \mathrm{s}\). Data From...
Study smarter with the SolutionInn App