Problem 1: The jackson company is considering the purchase of a new machine that is expected to reduce cash outflows. The cost of this machine is $30,000. The annual reduction in cash outflows is as follows:
Year amount
1 5000
2 8000
3 12000
4 14000
If the cost of capital is 10%, please calculate the following:
A. the PV of the benefits
b. The PV of the costs
C. NPV
D. Should the machine be bought.
Problem 2: Gray house is issuign bonds paying $105 annually that will mature 10 years from today. The bond is currently selling for $970. The face value of the bond is $1000.
Calculate
A. coupon rate
B. Current Yeild
C. YTM
Problem 3: The ABC company contribution income statement for the most recent month is presented below.
Sales ( 50,000 balls @ $80) $4,000,000
Less variable expenses 1,200,000
Contribution margin 2,800,000
less fixed expenses 616,000
net income 2,240,000
Compute the company's contribution margin percentage and break even point in both units and dollars.
Please show work for all.