A corporation has $5,000,000 of 8 percent preferred stock outstanding and a 40 percent tax rate. The after-tax cost of the preferred stock is ________
A) $400,000
B) $240,000
C) $666,667
D) $160,000
A
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A grocery chain is considering the installation of a set of 4 self-checkout lanes. The new self-checkout lane setup will replace 2 old cashier lanes that were staffed by a cashier and bagger on each lane
One cashier mans all 4 self-checkouts (answering questions, checking for un-scanned items, taking coupons, etc). Checkout on the new lanes takes 2 minutes (customers bag their own orders) while checkout with the old lanes took only 45 seconds. In addition, the electricity costs for both setups are $0.05 per checkout while bagging (material) costs are $0.10 per checkout with the old system and $0.15 for the new system. The new lanes also require $100/shift in capital costs. Assume that the lanes are always in use for 8 hours per day (1 shift) and that a worker makes $10/hour. (a) How many checkouts did the old system provide in a shift? (b) How many checkouts does the new system provide? (c) What is the multifactor productivity for each system?
A moving average forecasting method is a causal forecasting method
Indicate whether the statement is true or false
Tatum Corporation recently purchased a $1,200,000 asset that has a three-year service life and no salvage value. The company is subject to a 30% income tax rate and employs a 12% after-tax hurdle rate in capital investment decisions.Management is studying whether to depreciate the asset by using the straight-line method or the Modified Accelerated Cost Recovery System (MACRS). Assume that the following MACRS factors are in effect: year 1, 33%; year 2, 45%; year 3, 15%; and year 4, 7%YearFV of $1 at 12%FV of an ordinary annuity at 12% PV of $1 at 12%PV of an ordinary annuity at 12% 11.1201.0000.8930.89321.2542.1200.7971.69031.4053.3740.7122.40241.5744.7790.6363.03751.7626.3530.5673.60561.9748.1150.5074.111Required:A. Calculate the total depreciation expense that Tatum will record under
each method.B. Calculate the total tax savings that will occur with each method.C. On the basis of your calculations in part "B," which of the two methods will management likely prefer? Explain your answer.D. Compute the present value of the tax savings for each method, rounding to the nearest dollar. What will be an ideal response?
Which of the following is generally unnecessary in measuring the cost of debt?
A) a forecast of future interest rates B) the proportions of the various classes of debt a firm proposes to use C) the corporate income tax rate D) All of the above are necessary for measuring the cost of debt.