Diemia hospital has been considering the purchase of a new x-ray machine. the existing machine is operable for five more years and will have a zero disposal price. if the machine is disposed now, it may be sold for $80,000. the new machine will cost $600,000 and an additional cash investment in working capital of $25,000 will be required. the new machine will reduce the average amount of time required to take the x-rays and will allow an additional amount of business to be done at the hospital. the investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $200,000 each additional year of use. the new machine has a five-year life, and zero disposal value. these cash flows will generally occur throughout the year and are recognized at the end of each year. income taxes are not considered in this problem. the working capital investment will not be recovered at the end of the asset's life. a. what is the net present value of the investment, assuming the required rate of return is 18%? b. would the hospital want to purchase the new machine? a) $33,910b) $(46,650)c) $(46,650)d) $50,800

Which of the following best explains why treasury bonds have an effect on the size of the money supply? a. the amount of treasury bonds in circulation affects both unemployment and inflation. b. the government can spend more money and charge lower taxes by using treasury bonds. c. the federal reserve bank can buy and sell these bonds to raise or lower bank deposits. d. the interest paid on treasury bonds influences the interest rates charged by private banks. 2b2t

The link between volume of production and the cost of building manufacturing operations is particularly important in industries characterized byanswers: process innovations.product manufacturing.product innovation.process manufacturing.

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine