The management of Kunkel Company is considering the purchase of a $40,000 machine that would reduce operating costs by $7,000 per year

The management of Kunkel Company is considering the purchase of a $40,000 machine that would reduce operating costs by $7,000 per year. At the end of the machine’s eight-year useful life, it will have zero scrap value. The company’s required rate of return is 12% on all investment projects.



Required:

1. Determined the net present value of the investment in the machine.

2. What is the difference between the total, undiscounted cash inflow and cash out flows over the entire life of the machine?

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The following are the information available from the Trial Balance of Mr. Ali & Sons for the year ended on 31st December 2010

The following are the information available from the Trial Balance of Mr. Ali & Sons for the year ended on 31st December 2010.

Particulars Debit Credit

Accounts receivable 205,000

Bad debts 8,000

Provision for doubtful debts 6,000



Adjustments:

Write off Rs. 5,000 bad debts from accounts receivable.
Maintain provision for doubtful debts at 5%.
Required:

1. Calculate new provision.

2. Calculate the amount of Provision for doubtful debts to be appeared in Profit and

Loss Account.

3. Calculate the amount of Sundry debtors to be shown in Balance Sheet.

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Gator Electronics AA corporate bond has a face value of $1,000 and an annual coupon interest rate of 7%

Gator Electronics AA corporate bond has a face value of $1,000 and an annual coupon interest rate of 7%. Interest is paid annually. Ten years of the life of the bond remain. The current market price of the bond is $872. To the nearest whole percent, what is the yield to maturity (YTM) of the bond today?

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The risk free rate on 10-year U.S.

The risk free rate on 10-year U.S. Treasury bills at 3% and the expected rate of return on the overall stock market is 11%. If Gator Electronics has a beta of 1.6. What is the cost of equity?

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Ajax Manufacturing dividend is $8 per share of common stock in one year

Ajax Manufacturing dividend is $8 per share of common stock in one year. The dividend growth rate is 3%. Required rate of return is 14%

What is the current market price per share?

What is the annual rate of return if you purchase the stock at $65?

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Florida Sale Away common stock sells for $82 per share

Florida Sale Away common stock sells for $82 per share, has a growth rate of 7% and a dividend that was just paid of $3.82. What is the annual percent yield per share?

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The corporate treasurer of gator electronics corporation requests

The corporate treasurer of gator electronics corporation requests that you calculate the cost of the company\\\'s retained earnings based on the following information: The expected growth future growth rate is 4%. The current market price per share of Gator common stock is $39 and the expected dividend in is $1.50 per share. Provide her with the answer and the explanation of how you arrived at the answer and comment on how this information can be useful and /or misleading.

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