Fin 3400 ch 12 smartbook - Study guides, Class notes & Summaries

FIN 3400 Ch 12 SMARTBOOK - Complete Solutions (Verified) In 4 years, an existing machine will have a zero book value and a market value of $4,200. A new machine costing $26,400 can replace this machine, lower variable costs by $8,200 a year, and have a market value of $13,300 and a zero book value in 4 years. The incremental depreciation is $5,300. The tax rate is 35%. What is the operating cash flow for year 4? $7,185 Rationale: OCF = ($8,200 - $5,300)(1 - 0.35) + $5,300 = $7,185 A firm purchas...

FIN 3400 Ch 8 SMARTBOOK - Complete Solutions (Verified) Assume you are computing P0, which is the current price of a stock. What discount factor will you use to discount the dividend in year 3? (1 + i)^3 Which one of these defines the current value of a stock? Discounted value of both the future dividends and the future stock price What is the disadvantage of a market order? The execution price is unknown in advance. A stock is expected to pay a dividend of $2 in year 2, $3 in year 3, and sell ...