Question 24 Europa Corporation is financing an ongoing construction project. The firm will need $5,000,000 of new capital during each of the next 3 years. The firm has a choice of issuing new debt or equity each year as the funds are needed, or issue only debt now and equity later. Its target capital structure is 40% debt and 60% equity, and it wants to be at that structure in 3 years, when the project has been completed. Debt flotation costs for a single debt issue would be 1.6% of the gross debt proceeds.
Conclusion: If the lawsuit can be collected on an annuity basis in a structured settlement, then John’s fee could potentially be non-taxable. This is an option that should certainly be explored. The $25,000 in expenses should still be deductible as business expenses. Issue d) Do I get better tax benefits for paying the lease on office space or for buying the building? What are the differences?
Name:_______________ Part I Open-ended question (10 points; 20% of exam) ID:____________ For Quick Start the first month in business has ended. In the last days of December 2005, they already received contributed capital of € 6,000 and they obtained a five-year bank loan of € 24,000 at an annual rate of interest of 10 percent. Interest has to be paid each year on October 31. On December 31, 2005 various store equipment was purchased at a total cost of € 12,000, paid in cash. It is expected that the equipment has to be replaced after five years.
If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.) • $480,906 • $429,560 • $414,322 • $477,235 20. Jack Robbins is saving for a new car. He needs to have $21,000 for the car in three years.
Penn Medical Center, a for-profit hospital, is considering the purchase of a new 64-slice CT scanner. The cost of the new scanner is $5 million and will be depreciated over 10 years on a straight line basis to $0 savage value. The tax rate is 40%. The financing options include either borrowing the full cost of the scanner or leasing a scanner. The lease option is a 5-year lease with equal before-tax lease payments of $950,000 per year.
Based on the assumptions contained in this plan, I estimate that the businesses will break-even in its first year of operations. Cash Flow Statement As the owner of Chagadama Christian Bookstore, I will invest $60,000. This money will be used to cover startup costs of $12,725 and initial operating costs. Fixed costs are limited to our office space and equipment lease at $1,800 per month, which includes a 1,000 square foot store on Main Street, a telephone system, and two photocopiers. As continued positive cash flows permit, the amounts I invested will be repaid.
We will put down $3000 each and the rest will be donations from friends and family. Our fixed assets are for continuing use, which is, office space, airline discounts and other fixed assets like office equipments and accessories and utility bills like electricity. Our variable costs will change because of the different activities of the business dealing with labor and advertising. Below we have our cash flow projection for the next five years. We estimated how many customers we need to breakeven each year.
BUSN602 Midterm Exam Set 2 Click Link Below To Buy: http://hwcampus.com/shop/busn602-midterm-exam-2/ Return to Assessment List Part 1 of 1 - 100.0 Points Question 1 of 20 5.0 Points Jill Clinton puts $1,000 in a savings passbook that pays 4% compounded quarterly. How much will she have in her account after five years? A.$1,200.50 B.$1,220.20 C.$1,174.80 D.$1,217.50 Question 2 of 20 5.0 Points An increase in inflation should: A.increase the demand for loanable funds B.decrease the interest rate on loans C.increase the interest rate on loans D.none of the above Question 3 of 20 5.0 Points Economists use a ___________________ framework to explain
Part (b) Calculate the seasonal forecast of sales for February of Year 3. Part (c) Which forecast do you think is most accurate and why? 11. Question : (TCO 6) Davis Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project A Project B Initial Investment $800,000 $650,000 Annual Net Income $50,000 45,000 Annual Cash Inflow $220,000 $200,000 Salvage Value $0 $0 Estimated Useful Life 5 years 4 years The company requires a 10% rate of return on all new investments.
Question: (TCOs 6 and 7) XYZ plating is going ahead on an expansion project. They will be able to earn $300 per hour and run 3,000 hours per year. What is the net present value for the next five years with an interest rate of 6%? • BSOP 209 Week 6 Quiz 1. Question: (TCO 14) Briefly discuss the decision methods used when there is complete uncertainty as to which state in a decision environment may occur.