Problem 6-12, Marsha Jones Horse Transporter
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
Given information regarding buying a horse transporter instead of renting one… find the NPV for the investment.
Given information regarding buying a horse transporter instead of renting one… find the NPV for the investment.
Given information regarding a project for renting a warehouse and investing in plant and equipment with growing sales… determine the net present value of the project.
Given the information regarding the costs, production, and salvage value of a project… determine what the net present value of the project is.
Given the initial investment on a project along with cash inflows before tax, tax rate, bonus depreciation, and opportunity cost… calculate the NPV and IRR for both companies A and B.
While referring to the excel spreadsheet file of Table 6.2 (big grid) and given the two different scenarios of a project… determine the NPV of both while determining if the project is attractive or not.
Determine the present value of Sudbury’s depreciation tax shields and the present value of the tax shields assuming straight-line depreciation, double-declining depreciation, and immediate write-off of the factory assuming a 10-year life.
Given the cost of a new kiln, the installation cost, the years of use, the tax rate, and the opportunity cost… determine the present value of the tax shield using two different methods: a tax-deductible expense, or if it is depreciated straight-line. Which one results in the higher cost? The lower cost?
Given the installation cost of air conditioning for a dormitory, the yearly operating cost, the life, and the real cost of capital… calculate the equivalent annual cost for the air conditioning.
Given the investment amount, life in years, and the cost of capital… determine the amount of revenue that would be needed each year to recover the cost of upgrading the California plant.
Given the capital investment amount of upgrading the plant in California, the marginal tax rate, cost of capital, and the economic life… determine the after-tax equivalent annual cost. What is the extra cost consumers must pay to cover the cost?