Questions from Corporate Finance

Q: One year ago, your company purchased a machine used in manufacturing

One year ago, your company purchased a machine used in manufacturing for $110,000. You have learned that a new machine is available that offers many advantages; you can purchase it for $150,000 today....

Q: Beryl’s Iced Tea currently rents a bottling machine for $50,

Beryl’s Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase t...

Q: You have just completed a $20,000 feasibility study for

You have just completed a $20,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $100,000, but if you sold it today, you would net $115,00...

Q: You purchased a machine for $1 million three years ago and

You purchased a machine for $1 million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is 35%. If you sell the machine right now (after t...

Q: The Jones Company has just completed the third year of a five

The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $300,000. a. What is the book value of the equipment? b. I...

Q: You run a construction firm. You have just won a contract

You run a construction firm. You have just won a contract to build a government office building. Building it will require an investment of $10 million today and $5 million in one year. The government...

Q: Just before it is about to sell the equipment from Problem 20

Just before it is about to sell the equipment from Problem 20, Jones receives a new order. It can take the new order if it keeps the old equipment. Is there a cost to taking the order and if so, what...

Q: Home Builder Supply, a retailer in the home improvement industry,

Home Builder Supply, a retailer in the home improvement industry, currently operates seven retail outlets in Georgia and South Carolina. Management is contemplating building an eighth retail store acr...

Q: If Daily Enterprises uses MACRS instead of straight-line depreciation,

If Daily Enterprises uses MACRS instead of straight-line depreciation, which incremental free cash flows from Problem 10 would increase and which would decrease?

Q: Markov Manufacturing recently spent $15 million to purchase some equipment used

Markov Manufacturing recently spent $15 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its m...