Question: The Long-Term Financing Company has identified an alternative project that is similar to a project currently under consideration in all respects except one. That is,

The Long-Term Financing Company has identified an alternative project that is similar to a project currently under consideration in all respects except one. That is, the new project will reduce the need for working capital by $10,000 during the 30-year life of the project. The cost of capital is 18 percent and the marginal corporate tax rate for the firm is 34 percent. What is the after-tax present value of this new alternative project?

Step by Step Solution

★★★★★

3.37 Rating (169 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Because working capital has no effect on the income sta... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

141-B-C-F-C-B (533).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

A machine currently under consideration by Holzmann Industries has a cost of $45,000. When the purchasing manager complained that a similar machine the company purchased 5 years ago was much cheaper,...

A rugby field is similar to a modern football field except that the goalpost, which is 18.5 ft wide, is located on the goal line instead of at the back of the endzone. The rugby equivalent of a...

An electret is similar to a magnet, but rather than being permanently magnetized, it has a permanent electric dipole moment. Suppose a small electret with electric dipole moment 1.0 10 -7 C m is 25...

he Long-Term Financing Company has identified an alternative project that is similar to a project currently under consideration in all respects except one. That is, the new project will reduce the...

Parrino, Essentials of Corporate Finance, 1e Help I System Announcements PRINTER VERSION BACK NEXT Sample Test Problem 10.4 The Long-Term Financing Company has identified an alternative project that...

A firms cost of capital is typically measured on a pre-tax basis. ______ 2. Because interest expense that a firm pays on outstanding bonds is tax deductible, this has the effect of increasing the...

Pleasehelpwiththefollowingquestion:...

Help Needed! I need someone to please go over my workbook for me. I am doing a 10K on GAP Inc. and have to do the workbook. Need to double check my figures please. Kindly find attach a copy of the...

LONG-LIVED ASSETS Refer to the notes to the financial statements.The first note, "Summary of Significant Accounting Policies," should provide information about the company's depreciation and...

Although your project management skills are quite good, you do occasionally run into unforeseen circumstances that lead to less-than-ideal results. Halfway through the installation of a new resume...

You are a specialist in supply chain management and have been asked to review the supply chain of a company known to you. You have been provided with three tasks as outlined below. Each of the tasks...

Problem 4 . Let f ( x ) = 1 / sqrt 1 + x Find the derivative of f ( x ) using the definition of the derivative. ( 8 points )

A private jet charter firm in Champaign is considering adding a new jet to their fleet. For a simple NPV analysis they have made the following assumptions: The cost of the new Global 5000 jet would...

The table below gives the frequency with which a sample of women drink tea and coffee (Arab, Lenore et al. "Gender differences in tea, coffee, and cognitive decline in the elderly: the Cardiovascular...

Reading Passage 1 You should spend about 20 minutes on Questions 1 - 14. A The Rise and Fall of the Shopping Mall 1956 saw the first appearance of what would become a symbol of the consumer...

Flu cases per school this past flu season in the Remulak school system *(n = 500) were 15 per week. For the entire state, the weekly average was 16, and the standard deviation was 15.1. Are the kids...

Q. What are the Top N games based on the number of users rated and what is the average UserScore for these games? Hint: You could create a bar chart using UserCount, Name and Average UserScore in...

In accounting for an operating lease, how are the lessees and lessors income statements affected?

Industry-Specific Ratios there are many ways of using standardized financial information beyond those discussed in this chapter. The usual goal is to put firms on an equal footing for comparison...

Statement of Cash Flows In recent years, several manufacturing companies have reported the cash flow from the sale of Treasury securities in the cash from operations section of the statement of cash...

Hi, Mr. Samad can invest in GHB stock or KYM stock. His projection of the returns on these two stocks is as follows: State Probability Return on GHB (%) Return on KYM (%) Bust 0.25 -2.0 5.0 Normal...

please explain not only give the answer thanku 6. You are faced with the probability distribution of the HPR on the stock market index fund given in Spreadsheet 5.1 of the text. Suppose the price of...

Myra Breck must choose between two bonds: Bond A pays $120 annual interest with semiannual payment and has a market value of $820. It has 9 years to maturity. Bond B pays $120 annual interest with...