Your engineering design firm is thinking about upgrading its server. there are two alternatives available: system 1 has an initial cost of $150,000 while system 2 costs $450,000. system 1 needs replacement in 5 years at the same cost and has a salvage value of $20,000, while system 2 needs replacement every 10 years and has a salvage value of $10,000. the estimated benefits from system 1 for the first 2 years is $20,000 per year and $ 40,000 per year for the last 3 years of its 5 year lifetime. benefits from system 2 are $70,000 per year over the ten year period. the firm is using an interest rate of 12%. a. which system should the company purchase according to present worth analysis? b. which system should you pick according to annual cash flow analysis? c. assuming that you’ll need these systems only for a project that will be finished in 18 years, given the following market values, which system will you pick?

Which of the following is not a potential problem with beta and its estimation? sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different than the "true" or "expected future" beta. the beta of "the market," can change over time, sometimes drastically.

The market yield on spice grills' bonds is 15%, and the firm's marginal tax rate is 33%. what is their shareholders' required return if the equity risk premium is 4%?

James albemarle created a trust fund at the beginning of 2016. the income from this fund will go to his son edward. when edward reaches the age of 25, the principal of the fund will be conveyed to united charities of cleveland. mr. albemarle specified that 75 percent of trustee fees are to be paid from principal. terry jones, cpa, is the trustee. james albemarle transferred cash of $500,000, stocks worth $400,000, and rental property valued at $250,000 to the trustee of this fund. immediately invested cash of $360,000 in bonds issued by the u. s. government. commissions of $7,900 are paid on this transaction. incurred permanent repairs of $9,000 so that the property can be rented. payment is made immediately. received dividends of $8,000. of this amount, $3,000 had been declared prior to the creation of the trust fund. paid insurance expense of $4,000 on the rental property. received rental income of $10,000. paid $8,000 from the trust for trustee services rendered. conveyed cash of $7,000 to edward albemarle.