Ten Financial Management Questions Essay Example | Topics and Well Written Essays - 1500 words

Ten Financial Management Questions - Essay ExampleAdd bracketed tax 34% $119,000Add the cost of capital $ 35,000Total $504,000Less depreciation of the old helicopter $54,000So the net cost of the newfangled helicopter $450,000Question 4 Mud crook Co. is considering buying a new equipment with cost of $625,000 and a salvage value of $50,00 at the end of its useful life of ten years. The equipment is evaluate to generate supernumerary annual cash flow for ten years with the following possibilities. Probability Cash Flow 15 $60,000 25 $85,000 45 $110,000 15 $130,000a. What is the expected cash flowb. If the companys cost capital is 10% what is the expected net present valuec. Should the company buy the equipmenta. The cost of the equipment is $625,00010 years post adeptness salvage value $50,000With probability 15, cash flow $60,000The inflow of income 60,000x10=$600,000b. Salvage value after 10 years $600,000Hence the present value 600,000/10=$60,000c. The cash flow shows that t he company gets a marginal profit, therefore it is not advisable to buy the equipment.Question 5 Explain how the price of a new security is determinedSecurity is the condition of being protected against danger or loss. In the general sense, security is a concept similar to safety. The polish between the two is an added emphasis on being protected from dangers that originate from outside. Individuals or actions that entrench upon the condition of protection are responsible for the breach of security. A security is a fungible, negotiable interest representing financial value. Securities are broadly categorized into debt and loveliness...What is the approximate yield to maturity of the bondsQuestion 3 Bar T Ranches Inc, is considering buying a helicopter for $350,000. The companys old helicopter has a book value of $85,000, but will only bring $60,000 if it is sold. The old helicopter butt be depreciated at the rate of $13,500 per year for next four years. The new helicopter can be depreciated using the five-year MARCS schedule. The new helicopter is expected to salve $62,000 after the taxes through reduced fuel and maintenance expenses. Bar T Ranches is in the 34% tax bracket and 12% cost of capital.Question 4 Mud Construction Co. is considering buying a new equipment with cost of $625,000 and a salvage value of $50,00 at the end of its useful life of ten years. The equipment is expected to generate additional annual cash flow for ten years with the following possibilities.Security is the condition of being protected against danger or loss. In the general sense, security is a concept similar to safety. The nuance between the two is an added emphasis on being protected from dangers that originate from outside. Individuals or actions that encroach upon the condition of protection are responsible for the breach of security. A security is a fungible, negotiable interest representing financial value. Securities are broadly categorized into debt and equity securi ties.