1. A piece of newly purchased industrial equipment costs $969,000 and is classif
ID: 2645711 • Letter: 1
Question
1. A piece of newly purchased industrial equipment costs $969,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. (e.g., 32.16))
Suppose In a Found Ltd. just issued a dividend of $2.57 per share on its common stock. The company paid dividends of $2.10, $2.31, $2.38, and $2.49 per share in the last four years.
2. If the stock currently sells for $60, what is your best estimate of the company?s cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
What if you use the geometric average growth rate? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
3. Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 110 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.
What is the company?s pretax cost of debt? (Do not round intermediate calculation and round your answer to 2 decimal places. (e.g., 32.16))
If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
1. A piece of newly purchased industrial equipment costs $969,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. (e.g., 32.16))
Explanation / Answer
1)
Answer
Working
2. If the stock currently sells for $60, what is your best estimate of the company
Year Beginning Book Value Depreciation Ending book Value 1 969000 138,470.10 830,529.90 2 830,529.90 237,308.10 593,221.80 3 593,221.80 169,478.10 423,743.70 4 423,743.70 121,028.10 302,715.60 5 302,715.60 86,531.70 216,183.90 6 216,183.90 86,434.80 129,749.10 7 129,749.10 86,531.70 43,217.40 8 43,217.40 43,217.40 0.00Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.