Works Citied- 4Question.docx - Surname 1 Works Cited 4 Questions and Solutions For Financial Course 1 Your company is valuing a project regarding the

Works Citied- 4Question.docx - Surname 1 Works Cited 4...

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Surname 1 Works Cited 4 Questions and Solutions For Financial Course. 1.Your company is valuing a project regarding the replacement of technologically obsolete machinery and equipment and expand the capacity at the same time. Old machinery andequipment bought 4 years ago, with 10 year economic life and $950,000 price and zero salvage value. It can be sold in the market for $300,000. New machinery and equipment cost $1,500,000, $150,000 must be paid for customs duties and $50,000 for set up. (These figures are the basis to calculate depreciation.) New machine has economic life of 6 years, straight line depreciation will be used, and is expected to generate additional sales of $650,000, also provide savings in costs amounting $70,000 per year. Additional working capital investment is $80,000, corporate tax rate is 20%, and required rate of return is 12%. Should the replacement be made? Use NPV for decision making.2.You are the financial advisor of a rich seykh, and suggested him to invest in Turkish treasury bonds. He bought TL 10 000 000 of bonds 2 years ago, with 5 year maturity, 12% interest, and semiannual interest payments. a.What is the value of its portfolio of Turkish bonds today, if the current rate of interest is 10% in the market?b.An 4% increase in interest rate is expected a year from now due to current account deficit, please advise him about his bond portfolio today, referring to market expectations. Also calculate the expected value of bonds a year from now.
Surname 2

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