Pauline's Products Inc is considering investing in a new piece of equipment that costs $75,000. The equipment is expected to generate revenues of $25,000 per year for five years. The equipment would be depreciated using the straight-line method over its five year life and have a salvage value of $8,000. The company considers the impact of income taxes in all of its capital investment decisions
The company has a 35 percent income tax rate and desires an after-tax rate of return of 12 percent on its investment. The net present value of the equipment is:
A) $7,042.
B) $(13,472).
C) $21,248.
D) $5,453.
D
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A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $59,500; the land at $47,000, and the parking lot at $18,500. Land should be recorded in the accounting records with an allocated cost of:
A. $100,000. B. $37,600. C. $47,000. D. $43,600. E. $0.
Which of the following is NOT a problem associated with proving the validity of the security market line?
A. The appropriate risk-free and market rates B. The additional return required for each additional increment of risk in the market place C. The stability of beta on an individual security over time D. All of the above are associated problems
Nationalization has NOT been seen in which of the following countries:
a. Venezuela b. Iran c. Russia d. England e. nationalization has been seen in all of these countries
Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2017. Selected account balances are available for the year ended December 31, 2018, and are stated in Euro, the local currency. Sales€400,000 Inventory (bought on February 1, 2018) 20,000 Equipment (bought on January 1, 2017) 90,000 Dividends (paid on September 1, 2018) 20,000 Accumulated depreciation - Equipment 12/31/18 45,000 Depreciation expense - Equipment, 2018 9,000 ??Relevant exchange rates for 1 Euro are given below:? January 1, 2017$0.91January 1, 20180.93February 1, 20180.94September 1, 20180.97December 31, 20181.014th quarter average, 20170.904th quarter average, 20180.98Average, 20180.95?Assume the functional currency is the Euro; compute the U.S. balance sheet amount for
accumulated depreciation for 2018. A. $44,100. B. $41,850. C. $40,950. D. $45,450. E. $42,750.