Q_tute_2

Concept Question 2.4 Suppose the federal government wishes to purchase goods and services valued at $200 billion today and finances these expenditures by raising taxes. According to some economists, this will lead to V level of national consumption a lower a higher

4. In Canada, the Ontario government provides a tax incentive for firms that spend on scientific research. This tax credit will most likely: a. help increase TFP in Ontario b. reduce spending on research and development (R&D) c. increase convergence among Canada's provinces d. reduce the likelihood of diminishing marginal returns

Problem 1 Jim is planning to invest between $12,000 and $15,000 in two types of investment: investment 1 yields 6% and investment 2 yields 8%. Because of tax laws, he should invest between 40% and 60% of his total investment in investment 1 and no more than $8,100 in investment 2. How much should he invest and how should that amount be allocated to the two investments? c) In this document, solve the problem graphically and explain the optimal allocation of investment fund to the two investments.

+ No. Question 1. 2 3 A project will incur $700 in shutdown costs the year after the completion of the project. The tax rate is 35%. What is the tax shield resulting from these tax-deductible shutdown costs (where a negative number means a cash outflow and a positive number means an incremental cash inflow)? A project will incur $700 in shutdown costs the year after the completion of the project. The tax rate is 35%. What is the tax shield resulting from these tax- deductible shutdown costs (where a negative number means a cash outflow and a positive number means an incremental cash inflow)? An investment of $83 generates after-tax cash flows of $50.00 in Year 1, $72.00 in Year 2, and $125.00 in Year 3. The required rate of return is 20 percent. Find the net present value.

Exhibit 1 Pre-tax rate of return: r= 0.10 Tax rate on the returns to investment: t = 0.25 Consider the information in the exhibit above. If the government spending displaces private consumption, then the opportunity cost for the government project should a. 0.075 11. b. 0.10 c. 0.25 d. 0.75 Consider the information in the exhibit above. If the government spending displaces private savings, then the opportunity cost for the government project should a. 0.075 b. 0.10 c. 0.25 d. 0.75 12.

Q.The Kuhl Brothers ask you whether they should buy the new machine. To help in your analysis, calculate the following: 1. Difference in after-tax cash flow from terminal disposal of new machine and old machine

QUESTION ONE Vision Ltd, a company based in the United States is considering investing in a manufacturing plant in Ghana. The construction cost is estimated at 9 billion Ghanian Cedi. The company estimates the useful life of the project to be 3 years and before tax earnings expected during the first and second year are 3 billion Ghanian Cedi and 2 bilion Ghanian Cedi in the third year. The earnings are to be remitted back to the in the United States at the end of each year.. At thé end of the third year, Vision Ltd expects to sell the plant for 5 billion Ghanian Cedi to the Ghanian Government. The company has a required rate of return of 17% p.a. The current exchange rate (spot rate) is $ 1/Cedi 8.7 and Cedi is expected to depreciate by 5% per year. parent The Ghana Government will impose a 20% tax rate on income. In addition, it will impose a 10% withholding tax to any funds remitted by the subsidiary to the parent. The US government will allow a tax credit on taxes paid in Ghana;…

Suppose the Australian government has announced tax cuts for the business sector. Using the loanable funds model, explain how this will impact the supply of and demand for loanable funds and the interest rate in Australia.

When investing in a natural resource project, a mining firm can add value to the project by a. selling copper in advance to customers b. taking out political risk insurance from the home government c. all of the above d. using foreign financing

QUESTION 1 A new machine is to be purchased for $200,000. The company believes it will generate $75,000 annually in revenue due to the purchase of this machine. The company will have to train an operator to run this machine and this will result in additional labor expenses of $25,000 annually. The new machine will be depreciated using 5 years MACRS, even though the life of the project is 7 years, and the salvage value is estimated to be $0 at the end of year 7. The tax rate is 40% and the company's MARR is 15%.

39. Which of the following statements is true? a b C d e a b с d Most economists support the use of fiscal policy to help "push the economy" in a desired direction, and the use of monetary policy for "fine tuning." e Many economists recommend the use of tax cuts to enhance work effort, investment, and innovation, and the use 38. Which of the following statements is true? of government spending on public capital projects (infrastructure). The US (gross) national debt was $10.0 trillion in May 2017. All of the above. Only a) and b) The government spent $700 billion to help financial institutions through the Troubled Asset Relief Program (TARP) of October 2008. A political business cycle may destabilize the economy: Election years have been characterized by more expansionary policies regardless of economic conditions. There is crowding-out when an increase in one sector's spending increases another sector's spending. All of the above. Only a) and b)

Ruba Nasser SAOG is planning to invest in project as part of the organization's growth strategy to enhance the financial sustainability of the organization. The organization has two options available. Option 1– Project A – Increase the capacity in Division A Option 2 – Project B – Increase the capacity in Division B. Both projects are mutually exclusive. The available capital investment for the Project is RO 250,000. Due to the limited funds the organization needs to decide on a suitable investment project which will be part of the sustainable growth strategy. Below are the details for both Projects Project A - Increase in machine capacity in Division A Cost of Investment – RO 250,000 Useful Life – 4 Years Year Operating Profit Before Depreciation (RO) 55,000 65,000 80,000 80,000 1 2 3 4 The project has a scrap value of OMR 75,000. Project B – Increase in Machine Capacity in Division B Cost of Investment – RO 250,000 Operating Profit Before Depreciation (RO) 75,000 75,000 78,000 82.000…

9. International capital budgeting Aa Aa One of the important components of multinational capital budgeting is to analyze the cash flows generated from subsidiary companies. Foreign governments often have restrictions on the amount of cash flows that the subsidiary company can repatriate to the parent company. Companies use different techniques to work around the restrictions. One such method is transfer pricing, which involves the subsidiary company obtaining raw materials from: A local vendor at a very low cost so that there is more profit left to repatriate The parent company at a high cost so that there is less profit left to repatriate The parent company at a very cost so that ther is more profit left to repatriate Consider this case: Sacramone Products Co. is a U.S. firm evaluating a project in Australia. You have the following information about the project: The project requires an investment of AU$800,000 today and is expected to generate cash flows of AU$900,000 at the end of…

Question 2 Kako Ltd is considering introducing a new product unto the market. This will require the injection of capital to the tune of GH¢20,000 for the purchase of the equipment for production. The cost of the building that Kako Ltd intends to use for the project is GH¢30,000. The Production and Marketing department has presented the information in the table below:     2019 Variable cost per unit of the product GH¢2 Selling price per unit GH¢6 Quantity 4000 units per annum Again the following information should be taken not of: Feasibility studies cost the company GH¢2000 Test marketing expenses amounts to GH¢3000 Variable cost will increase by 5% per annum Selling price will increase by 10% per annum Marketing expense will be 5% of sales revenue per year An initial working capital investment of GH¢2000 will be made. Subsequently, net working capital at the end of each year will be equal to 10 percent of sales for that year. In the final year of the…

"Tax evasion and tax avoidance costs in UK government £34 billion a year" a) In the light of the above statement, explain the terms tax evasion and tax avoidance? b) Discuss the measures that the UK government are taking to migrate tax avoidance and tax evasion?

Using the payback and ARR methods to make capital investment decisions Refer to the Hunter Valley Snow Park Lodge expansion project in Short Exercise S26-4 and your calculations in Short Exercises S26-5 and S26-6. Assume the expansion has zero residual value. Requirements Will the payback change? Explain your answer. Recalculate the payback if it changes. Round to one decimal place. Will the project’s ARR change? Explain your answer. Recalculate ARR if it changes. Round to two decimal places. Assume Hunter Valley screens its potential capital investments using the following decision criteria: Will Hunter Valley consider this project further or reject it?

13. The replacement chain approach - Evaluating projects with unequal lives Aa Aa Evaluating projects with unequal lives Your company is considering starting a new project in either France or Mexico-these projects are mutually exclusive, so your boss has asked you to analyze the projects and then tell her which project will create more value for the company's stockholders. The French project is a six-year project that is The Mexican project is only a three-year project; however, your expected to produce the following cash flows: company plans to repeat the project after three years. The Mexican project is expected to produce the following cash flows: Project: French Year 0: -$650,000 Project: Mexican Year 1: $220,000 Year 0: -$475,000 Year 2: $240,000 Year 1: $225,000 Year 3: $245,000 Year 2: $235,000 Year 4: $270,000 Year 3: $255,000 Year 5: $120,000 Year 6: $100,000 Because the projects have unequal lives, you have decided to use the replacement chain approach to evaluate them. You…

(6)(a)Identify the revenue and cost related motives for direct foreign investment. (b)Suppose a U.S. based MNC plans to invest in a new plant either in the U.S or in Zambia. The MNC intends to invest 30% of its investment spending in this new plant while the remainder is devoted to the firm's existing structure in the U.S. The characteristics of the proposed new project are given below: If located in U.S If located in Zambia Mean expected annual returns on investment 25% 25% Standard deviation of expected annual returns on investment 0.09 0.11 Correlation of expected annual returns on investment with returns on prevailing U.S business 0.80 -0.05 Determine, with robust quantitative explanation, which location will best provide the firm with a more stable flow of revenue.

Question 1 Assuming that you have beeh appointed finance director of BPX Bhd. The company is considering investing in the production of an electronic device used in automobile. There are two mutually exclusive projects available to achieve the plan. Project I Return in one year (RM) 60,000 60,000 Project II State of economy Probability Good 0.3 58,000 62,000 Moderate 0.5 Poor 0.2 50,000 48,000 Project I or II would require an investment of RM50,000. The company has a current market value of RM800,000. The estimated returns of the market in one year are: Good state 20%, Moderate state 15% and Poor state 10% respectively. Assume that the treasury bill rate as 9%. The research director projects that the company's share price will move in line with the market. Required (in no more than 1,000 words, show all relevant workings) (a) Calculate i market variance ii. systematic risk for Project I iii. systematic risk for Project II iv. covariance between Project I and the market v. covariance…

Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerland, where interest rates are low. Provide support for your rationale. What impact does foreign investment have on the weighted average cost of capital calculations?

Question 5: International energy drink giant Energica Turkey's regional sales manager Hakan Çokbilir investigate the plans for the Middle East and plans to launch in Azerbaijan in 2021. The market price of the Company's plant in Turkey is determined to be $ 5 million. It causes the company to need a capital of $ 20 million in 2021 to shift the investment to Azerbaijan and to establish a new bottling factory and distribution channel. While the fixed expenses required for production, distribution and marketing as of 2021 are $ 3 million per year, 50 million liters of energy drink will be produced in the country at the end of each year. Variable costs arising from production and distribution will be 12 Cent per liter. According to the policy pursued, the expected minimum return rate of the company is accepted as 6%. The income from sales is expected to be 35 cents per liter. Bottling factories are expected to serve almost forever, so all unit costs and sales revenues are expected to…

Question 5: International energy drink giant Energica Turkey's regional sales manager Hakan Çokbilir investigate the plans for the Middle East and plans to launch in Azerbaijan in 2021. The market price of the Company's plant in Turkey is determined to be $ 5 million. It causes the company to need a capital of $ 20 million in 2021 to shift the investment to Azerbaijan and to establish a new bottling factory and distribution channel. While the fixed expenses required for production, distribution and marketing as of 2021 are $ 3 million per year, 50 million liters of energy drink will be produced in the country at the end of each year. Variable costs arising from production and distribution will be 12 Cent per liter. According to the policy pursued, the expected minimum return rate of the company is accepted as 6%. The income from sales is expected to be 35 cents per liter. Bottling factories are expected to serve almost forever, so all unit costs and sales revenues are expected to…

Hi, please help me with the following questions  Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get. Under this scheme, what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale? In this problem we have considered two government schemes: A price floor is established and the government purchases any excess output and The government buys all the farmers' output at the floor price and resells at whatever price it can get. Which scheme will taxpayers prefer?

Question 4 Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. a. Find the Net Present Value (NPV) b. Determine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteria