An injection molding machine can be purchased and installed for $90,000. It is in the seven- year GDS property class and is expected to be kept in service for eight years. It is believed that $10,000 can be obtained when the machine is disposed of at the end of year eight. The net annual value added (i. e., revenues less expenses) that can be attributed to this machine is constant over eight years and amounts to $15,000. An effective income tax rate of 40% is used by the company, and the after-tax MARR equals 15% per year. (30 points)

a) What is the approximate value of the company’s before-tax MARR?

b) Determine the GDS depreciation amounts in years one through eight.

c) What is the taxable income at the end of year eight that is related to capital investment?

d) Set up a table and calculate the ATCF for this machine.

e) Should a recommendation be made to purchase the machine?

How does your household gain from specialization and comparative advantage? (what is produced, what is not produced yet paid to a specialist to produce? )

Ummit record company is negotiating with two banks for a $157,000 loan. fidelity bank requires a compensating balance of 24 percent, discounts the loan, and wants to be paid back in four quarterly payments. southwest bank requires a compensating balance of 12 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. the stated rate for both banks is 9 percent. compensating balances will be subtracted from the $157,000 in determining the available funds in part a. a-1. calculate the effective interest rate for fidelity bank and southwest bank. (do not round intermediate calculations. input your answers as a percent rounded to 2 decimal places.) a-2. which loan should summit accept? southwest bank fidelity bank b. recompute the effective cost of interest, assuming that summit ordinarily maintains $37,680 at each bank in deposits that will serve as compensating balances

73. calculate the weighted average cost of capital (wacc) based on the following information: the equity multiplier is 1.66; the interest rate on debt is 13%; the required return to equity holders is 22%; and the tax rate is 35%. (a) 15.6% (b) 16.0% (c) 15.0% (d) 16.6% (e) none of the above