Question

Your computer manufacturing firm must purchase 9 comma 000 keyboards from a supplier. One supplier demands...

Your computer manufacturing firm must purchase 9 comma 000 keyboards from a supplier. One supplier demands a payment of $ 81 comma 000 today plus $ 9 per keyboard payable in one year. Another supplier will charge $ 19 per? keyboard, also payable in one year. The? risk-free interest rate is 8 %. a. What is the difference in their offers in terms of dollars? today? Which offer should your firm? take? b. Suppose your firm does not want to spend cash today. How can it take the first offer and not spend $ 81 comma 000 of its own cash? today?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Your computer manufacturing firm must purchase 11,000 keyboards from a supplier. One supplier demands a payment...
Your computer manufacturing firm must purchase 11,000 keyboards from a supplier. One supplier demands a payment of $ 121. 000 today plus $ 11 per keyboard payable in one year. Another supplier will charge $ 23 per​ keyboard, also payable in one year. The​ risk-free interest rate is 7%. a. What is the difference in their offers in terms of dollars​ today? Which offer should your firm​ take? b. Suppose your firm does not want to spend cash today. How...
Your computer manufacturing firm must purchase 20,000 keyboards from a supplier. One supplier demands a payment...
Your computer manufacturing firm must purchase 20,000 keyboards from a supplier. One supplier demands a payment of $195,000 today plus $10 per keyboard payable in one year. The risk-free interest rate is 5% (the firm may also borrow at this rate). Another supplier will charge $21 per keyboard, also payable in one year. Which offer should your firm take? Suppose the computer manufacturing firm does not have cash to pay upfront. What the firm should do and which offer should...
One year? ago, your company purchased a machine used in manufacturing for $ 100 comma 000....
One year? ago, your company purchased a machine used in manufacturing for $ 100 comma 000. You have learned that a new machine is available that offers many advantages and you can purchase it for $ 150 comma 000 today. It will be depreciated on a? straight-line basis over 10 years and has no salvage value. You expect that the new machine will produce a gross margin? (revenues minus operating expenses other than? depreciation) of $ 40 comma 000 per...
One year​ ago, your company purchased a machine used in manufacturing for $ 90 comma 000....
One year​ ago, your company purchased a machine used in manufacturing for $ 90 comma 000. You have learned that a new machine is available that offers many​ advantages; you can purchase it for $ 140 comma 000 today. It will be depreciated on a​ straight-line basis over ten​ years, after which it has no salvage value. You expect that the new machine will contribute EBITDA​ (earnings before​ interest, taxes,​ depreciation, and​ amortization) of $ 35 comma 000 per year...
One year​ ago, your company purchased a machine used in manufacturing for $ 110 comma 000$110,000....
One year​ ago, your company purchased a machine used in manufacturing for $ 110 comma 000$110,000. You have learned that a new machine is available that offers many​ advantages; you can purchase it for $ 150 comma 000$150,000 today. It will be depreciated on a​ straight-line basis over ten​ years, after which it has no salvage value. You expect that the new machine will contribute EBITDA​ (earnings before​ interest, taxes,​ depreciation, and​ amortization) of $ 60 comma 000$60,000 per year...
Your firm has a? risk-free investment opportunity with an initial investment of $ 160 comma 000...
Your firm has a? risk-free investment opportunity with an initial investment of $ 160 comma 000 today and receive $ 175 comma 000 in one year. For what level of interest rates is this project? attractive? The project will be attractive when the interest rate is any positive value less than or equal to
One year​ ago, your company purchased a machine used in manufacturing for $ 90 000. You...
One year​ ago, your company purchased a machine used in manufacturing for $ 90 000. You have learned that a new machine is available that offers many advantages and that you can purchase it for $ 150 000 today. The CCA rate applicable to both machines is 40 %​; neither machine will have any​ long-term salvage value. You expect that the new machine will produce earnings before​ interest, taxes,​ depreciation, and amortization ​(EBITDA​) of $ 60000 per year for the...
1. You receive a ​$5 comma 000 check from your grandparents for graduation. You decide to...
1. You receive a ​$5 comma 000 check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning 6​% per year and you think you will need to have ​$10 comma 000 saved for the down payment. How long will it be before the ​$5 comma 000 has grown to ​$10 comma 000 ​? To double the money you received from your​ grandparents, it will take nothing years.  ​(Round...
Firm Valuation Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier...
Firm Valuation Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. The current cash flow from assets for Arras is $6.8 million. The cash flows are expected to grow at 8% for the next 5 years before leveling off to 4% for the indefinite future. The cost of capital for Shultz and Arras is 12% and 10%, respectively. Arras currently has...
• Your company has spent $240,000 on research to develop a new computer game. The firm...
• Your company has spent $240,000 on research to develop a new computer game. The firm is planning to spend $44,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,400. The machine has an expected life of 3 years, a $29,000 estimated resale value, and falls under the MACRS 5-year class life. Revenue from the new game is expected to be $340,000 per year, with costs...