6. We Know Care Company is looking at installing an Al customer service system at an...
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6. We Know Care Company is looking at installing an Al customer service system at an initial cost of the technology equipment amounting to $300,000. The cost of the Al equipment will be depreciated straight-line to zero over the project's five-year life, at the end of which the Al equipment can be sold for $30,000. The Al customer service system will save the company $75,000 per year in pretax operating costs, and the Al system requires an initial additional investment in new working capital of $22,000. The income tax rate is 21% and a discount rate of 8% is used to evaluate the project. Calculate the New Present Value of the Al customer service project and state whether the project should be accepted or rejected. You must show all of your calculations. 7. A company in which we are interested just paid a dividend of $6.00 per share on its stock. The dividends are expected to grow at a constant rate of 4% per year, indefinitely. If we want a return of 10% on this stock, what is the current price we would be willing to pay for the stock? Show your calculations. 6. We Know Care Company is looking at installing an Al customer service system at an initial cost of the technology equipment amounting to $300,000. The cost of the Al equipment will be depreciated straight-line to zero over the project's five-year life, at the end of which the Al equipment can be sold for $30,000. The Al customer service system will save the company $75,000 per year in pretax operating costs, and the Al system requires an initial additional investment in new working capital of $22,000. The income tax rate is 21% and a discount rate of 8% is used to evaluate the project. Calculate the New Present Value of the Al customer service project and state whether the project should be accepted or rejected. You must show all of your calculations. 7. A company in which we are interested just paid a dividend of $6.00 per share on its stock. The dividends are expected to grow at a constant rate of 4% per year, indefinitely. If we want a return of 10% on this stock, what is the current price we would be willing to pay for the stock? Show your calculations.
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Answer rating: 100% (QA)
6 To calculate the Net Present Value NPV of the Al customer service project we need to consider the initial investment annual savings salvage value ta... View the full answer
Related Book For
Transportation A Global Supply Chain Perspective
ISBN: 9781337406642
9th Edition
Authors: Robert A. Novack, Brian Gibson, Yoshinori Suzuki, John J. Coyle
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