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Capital Budgeting

Compute the internal rate of return for an investment proposal

The following data pertains to an investment proposal: Required investment $400,000 Annual cost savings $105,700 Projected life of investment 6 years Projected salvage value $0 Required rate of return 12% Ignoring income taxes, the internal rate of return on this investment is closest to:

Planning Corporate Investment Activities Discussion Question

I have to answer these questions below in 400 words. I have been reading the chapter and don't fully understand these questions: Discuss the various methods used for project evaluation and the advantages and disadvantages of each? Discuss the various aspects that must be considered when calculating cash flow when making

Managerial Finance

1) Which one of the following is correct? a. A major disadvantage of a partnership or a corporation as a form of business is the fact that they do not offer their owners limited liability, whereas proprietorships do. b. There are more partnerships and sole proprietorships than corporations in the US, and unincorpora

Present Value Factor Calculation

Present value P4-10 Present value calculation Without referring to the preprogrammed function on your financial calculator or tables, use the basic formula for present value, along with the given opportunity coast, I, and the number of periods, n, to calculate the present value interest factor in each of the cases shown i

Capital Budgeting

1.Uneven Cash Flows: Find the NPV (Net Present Value) of a project that requires an investment of $400 now; and another expense of $500 at the end of the 1st year. It gives cash inflows of $300 at the end of year 3, $400 at the end of year 4, and $800 at the end of year 5. The required rate of return is 11%. Is the project acce

Calculate Payback Period and NPV. Neil Corporation

NEIL CORPORATION HAS 3 PROJECTS UNDER CONSIDERATION. THE CASH FLOWS FOR EA ITEM IS SHOWN. THE FIRM HAS 16% COST OF CAPITAL. All projects has a initial investment of $40,000. CASH FLOWS Project A PROJECT B PROJECT C 1ST YEAR $13,000 $7,000 $19,000 2ND " " $13,000

10.2, 10.5, 10.24, 10.28 The Fundamentals of Capital Budgeting: NPV, Payback

10.2 Net present value: Kingston, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this i

Equipment Purchase and Capital Budget

Dr. David Dunn, head of the radiology department at Grant Clinic Inc., is adding a new piece of diagnostic equipment to the department. Two similar models are offered by two different vendors, and both models would serve the needs of the clinic. Both also have an estimated useful life of five years, with no salvage value at the


Kosch Inc. is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually. Due to the sales increase, Delta expects its working capital to increase $1,000 during the life of the project. Delta will depreciate the machine using the

Salt at Pear Computer Services: NPV, IRR and Project Evaluation

I need help with the following questions based on the details given in the attached file: 1. Salt has requested that all quantifiable data, upon which he will base his choice of project, be compiled and presented to him. The data needed are shown in the following table. Complete the missing entries for project C. 2. Com

Inflation, Budget Constraint, Unemployment Rate

Use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. "In 1933 net private domestic investment was minus $6 billion. This means that in that particular year the economy produced no capital goods at all." Do you agree? Why o

Performance Evaluation Purposes

For performance evaluation purposes, the variable costs of a service department should be charged to operating departments using: 1- the actual variable rate and the budgeted level of activity for the period. 2- the budgeted variable rate and the actual level of activity for the period. 3-

Compare and contrast shareholder maximization to stakeholder value maximization. Describe market forces that influence the ideological tension between shareholder and stakeholder. How does a shareho

Answer the attached questions with at least five sentences each, >>>thoroughly and in your own words<<< 1. Compare and contrast shareholder maximization to stakeholder value maximization. Describe market forces that influence the ideological tension between shareholder and stakeholder. How does a shareholder define value

Capital Budgeting; Analysis of Franchise

You have the opportunity to purchase a franchise office equipment servicing business for $500,000; you also have the opportunity to start your own, independent, office equipment sales-and-service business, which would also require a start-up investment for $500,000. In either case, you will serve as the owner/manager of the busi


Please answer the following essay questions with a minimum of 100 words. Be as specific as possible. 1.Globalization is a word used frequently. Without using a dictionary definition, describe what globalization is, what are the advantages of globalization, and what are the disadvantages of globalization. 2.Define what a)

Residual Dividend Policy..

Please see attached. Please show calculations. Projected capital budget is $1,000,000, target capital structure is 30% debt, 20% preferred stock and 50% equity, and forecasted net income is $400,000. Please show calculations. a. If the company follows a residual dividend policy, how much dividends will it pay? b. How many sh

Multiple choice finance questions.

7. The difference between total receipts and total payments referred to as cumulative cash flow. beginning cash flow. net cash flow. cash balance. 8. In developing the pro forma income statement we follow four important steps: - 1) compute other expenses, - 2) determine a productio

Finance - Capital Budgeting

Capital Budgeting Extra Inc. is considering an investment in a new $35M power supply project. The project's cost will be depreciated evenly over its 5 year life and have a salvage value of $3.5M. At the end of five years, the company would like to scrap the project and sell all related assets for 150 percent of its book val

Roethlis Partners: Straight line depreciation in analyzing an investment project

Roethlis Partners has compiled the following data for a potential venture: Investment: $20,000; 5-year useful life, with no salvage value; Annual Sales Revenue = $10,000; Annual Cash Costs = $4,200 Roethlis imposes a required rate of return of 10%. Roethlis faces a 20% tax rate on income, and knows that the tax authori

Capital Budgeting Parameters

If the intital investment is $6.45 M and the net operating cash flow is 2.45 M for 5 years at a 8% cost of capital what is the: Payback? Discounted Payback Rate? NPV? Profitability Index? IRR? MIRR?

Net present value of annuities

1. What is the present value of the following annuities? a. $2,500 a year for 10 years discounted back to the present at 7 percent b. $70 a year for 3 years discounted back to the present at 3 percent 2. Napa Valley Winery (NVW) is a boutique winery that produces a high-quality, nonalcoholic red wine from organically gro

Capital Budgeting Process

1. What are the elements of the capital budgeting process? How would you conduct a capital budgeting analysis for a global project? How would you conduct the capital budgeting process, such as the calculation of NPV and IRR, from the perspective of the host country? 2. How would you conduct the capital budgeting process from

Discount Rate Explanation

What is a discount rate? Describe at least two different means to arrive at an appropriate one. What are some disadvantages of any given discount rate? What are some strengths and weaknesses of the Capital Asset Pricing Model? How would someone utilize Capital Asset Pricing Model in a financial decision-making process?

Financial management questions

1. Firm A employs a high degree of operating leverage; Firm B takes a more conservative approach. Which of the following comparative statements about firms A and B is true? A) A has a lower break-even point than B, but A's profit grows faster after the break-even. B) A has a higher break-even point than B, but A's profit gr

Capital Budgeting Project

Suppose you are a manager considering a capital budgeting project. You have examined the proposed project and, according to every relevant piece of information you can find, you feel that the project should be undertaken. After submitting your analysis, the division head informs you that the project has not been approved for f