Questions from Corporate Finance

Q: Letang Industrial Systems Company (LISC) is trying to decide between

Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $265,000, has a four-year life, and requires $73,000 in pretax annual operating...

Q: Consider a project to supply 100 million postage stamps per

Consider a project to supply 100 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $750,000 five years ago; if the...

Q: In the previous problem, suppose you were going to use

In the previous problem, suppose you were going to use a three-year MACRS depreciation schedule for your manufacturing equipment and you could keep working capital investments down to only $25,000 per...

Q: Vandelay Industries is considering the purchase of a new machine

Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,900,000 and will last for six years. Variable costs are 35 percent of sales, and fixed...

Q: Light-emitting diode (LED) light bulbs have become required in recent

Light-emitting diode (LED) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.45 and lasts for 1,000 hours. A...

Q: Gilmore, Inc., had equity of $145,000 at the beginning of

Gilmore, Inc., had equity of $145,000 at the beginning of the year. At the end of the year, the company had total assets of $210,000. During the year, the company sold no new equity. Net income for th...

Q: The previous problem suggests that using LEDs instead of incandescent

The previous problem suggests that using LEDs instead of incandescent bulbs is a no-brainer. However, electricity costs actually vary quite a bit depending on location and user type (you can get infor...

Q: This is a comprehensive project evaluation problem bringing together much

This is a comprehensive project evaluation problem bringing together much of what you have learned in this and previous chapters. Suppose you have been hired as a financial consultant to Defense Elect...

Q: A proposed new investment has projected sales of $585,000. Variable

A proposed new investment has projected sales of $585,000. Variable costs are 44 percent of sales, and fixed costs are $187,000; depreciation is $51,000. Prepare a pro forma income statement assuming...

Q: The previous two problems suggest that using LEDs is a

The previous two problems suggest that using LEDs is a good idea from a purely financial perspective unless you live in an area where power is relatively inexpensive, but there is another wrinkle. Sup...