1. Right Brothers is considering the purchase of some wood lathes for $229,001. These lathes belong in a 30% CCA class. The firm expects that it will be able to sell the machines for $49,500 in four years' time. What is the present value of the CCA tax shield on this equipment if the tax rate is 34% and the relevant discount rate is 12%?
2. A) Ajax Corporation's total current assets are valued at $135,000 and are comprised of cash, accounts receivable and inventory. Determine the value of the cash account given the following information: sales = $800,000; cost of goods sold = $300,000; accounts receivable turnover = 32 times; inventory turnover = 10 times.
B) Why is beta of a stock calculated? If the beta of Nike Company’s stock is less than 1, what does that indicate?