Author Question: P.D. Corporation is considering the purchase of a high-speed lathe that has an invoice price of ... (Read 31 times)

kwoodring · **on:** Jul 10, 2018

P.D. Corporation is considering the purchase of a high-speed lathe that has an invoice price of 250,000.

The
cost to ship the lathe to P.D.'s factory is 10,000, and the existing facilities will require modifications that are
expected to cost 20,000. The machine will be depreciated on a straight-line basis over its useful life of 10 years,
assuming no salvage value. P.D. Corporation is planning on paying for the lathe using a line of credit at the
bank that has an interest rate of 6 percent per year. The lathe is expected to increase production and sales. Sales
are expected to increase by 100,000 per year. Inventory and accounts receivable balances are expected to
increase by 10,000 and 20,000 respectively. Expenses to operate the lathe are 25,000 per year. P.D.'s marginal
tax rate is 40.
a. Calculate the initial outlay required to fund this project.
b. Calculate the incremental after-tax cash flow in year one of the project.

Question 2

The optimal capital structure occurs when operating leverage equals financial leverage.

Indicate whether the statement is true or false

honnalora · **Reply #1 on:** Jul 10, 2018

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Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

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