65.
Peterborough Trucking just purchased some fixed assets that are classified as
3-year property for MACRS. The assets cost $10,600. What is the amount of
the depreciation expense in year 3?
A. $537.52
B. $1,347.17
C. $1,569.86
D. $1,929.11
E. $2,177.56
Fin 460
Homework 1 AK
Time Value of Money, Interest Rates, Investment Decision Rules
1.) Saving for Retirement
You are age 25 and you are starting your first real job. You want to retire starting at age
65, and estimate you need the purchasing power of $1
50.
The Fluffy Feather sells customized handbags. Currently, it sells 18,000
handbags annually at an average price of $89 each. It is considering adding a
lower-priced line of handbags that sell for $59 each. The firm estimates it can
sell 7,000 of the lo
Dunmore: Depreciation and end-of-life salvage value of the four mach
The information in green is provided on page 3, bottom email. The res
(000)
Cost
-IRS Residual Value
= Total Depreciation
Years
Annual Depreciation
Tax rate
Depreciation tax savings
Term
Dunmore Corporation
Question 1.
The NPV of the MX900, MX700 and MDX740 are, respectively ($000):
505.4; -135.7; -389.3.
Question 2.
The amount to which the MDX740 can be depreciated (240) remains the
same. If the sales price decreases, the cash outflow as
Finance 453: Financial Theory and Analysis
Professor William D. Bradford
Winter 2015 Examination 2A
Show your work. Write legibly.
Name_
1. 25 Points. Dunmore Corporation. Suppose 1) the MX430 can be sold one
year from now for $700,000 and 5 years from no
Finance 453: Financial Theory and Analysis
Professor William D. Bradford
Autumn 2013 Examination 2A
Show your work. Write legibly.
Name_
1. 20 Points. Dunmore Corporation. Dunmore will purchase the MX700
if the NPV of the MX700 is $230,000. What is annual
FIN 460: Investments, Winter 2015
March 16, 2015
Final Exam
You have 1 hour and 50 minutes.
Please manage your time efficiently.
The last 3 pages give you the formulas. DO NOT DETACH THE FORMULA PAGES.
Name: _
1. (25 points) An investor has to form a port
FIN 460: Investments, Autumn 2015
November 5, 2015
Midterm Exam
You have 1 hour and 45 minutes.
Please manage your time efficiently.
The last 2 pages give you the formulas. DO NOT DETACH THE FORMULA PAGES.
There are 8 questions, for a total of 105 points.
55.
Jefferson & Sons is evaluating a project that will increase annual sales by
$145,000 and annual cash costs by $94,000. The project will initially require
$110,000 in fixed assets that will be depreciated straight-line to a zero book
value over the 4-y
64.
You are considering two independent projects with the following cash flows.
The required return for both projects is 16 percent. Given this information,
which one of the following statements is correct?
A. You should accept Project A and reject Projec
30.
The current book value of a fixed asset that was purchased two years ago is
used in the computation of which one of the following?
A. depreciation tax shield
B. tax due on the salvage value of that asset
C. current year's operating cash flow
D. change
Fin 460
Homework 2 AK
Asset Allocation, Return Calculations
1.) Scenario Analysis
The following table states the realized returns in three states of the market.
Probability
Stock X
Stock Y
Bear Market
0.2
-20%
-15%
Neutral Market
0.5
18%
20%
Bull Market
0
Fin460
Homework3AK
BondBasicsandtheYieldCurve
1.) ShortAnswer
a.
interestrates?
b. Treasurybondspayingan8%couponratewithsemiannualpaymentscurrently
sellatparvalue.Whatcouponratewouldtheyhavetopayinordertosellatparif
theypaidtheircouponsannually?
c. IsYTMa
Blooms: Analyze
Difficulty: 1 Easy
Learning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses.
Section: 9.5
Topic: Crossover rate
89.
You are analyzing a project and have gathered the following data:
Based on the prof
45.
Decreasing which one of the following will increase the acceptability of a
project?
A. sunk costs
B. salvage value
C. depreciation tax shield
D. equivalent annual cost
E. accounts payable requirement
Refer to section 10.6
AACSB: Analytic
Blooms: Remem
10.
Kelley's Baskets makes handmade baskets for distribution to upscale retail
outlets. The firm is currently considering making handmade wreaths as well.
Which one of the following is the best example of an incremental operating
cash flow related to the
59.
A project will produce cash inflows of $2,800 a year for 4 years with a final cash
inflow of $5,700 in year 5. The project's initial cost is $9,500. What is the net
present value of this project if the required rate of return is 16 percent?
A. -$311.0
108. The relevant discount rate for the following set of cash flows is 14 percent.
What is the profitability index?
A. 0.89
B. 0.93
C. 0.99
D. 1.03
E. 1.07
AACSB: Analytic
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 09-07 The profitability index
60.
Bi-Lo Traders is considering a project that will produce sales of $28,000 and
increase cash expenses by $17,500. If the project is implemented, taxes will
increase by $3,000. The additional depreciation expense will be $1,600. An
initial cash outlay o
112. The Chandler Group wants to set up a private cemetery business. According to
the CFO, Barry M. Deep, business is "looking up". As a result, the cemetery
project will provide a net cash inflow of $57,000 for the firm during the first year,
and the cas
FINAL PRACTICE QUESTIONS
1. The stock of Toyota has the following probability distribution of expected prices one year
from now:
(a) If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share,
what is your expected 1-year r