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Capital Budgeting

Capital Budgeting

Capital Budgeting Spreadsheet Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Expected net cash flows Time Project A Project B 0 ($375) ($575) 1 ($300) $190 2 ($200) $190 3 ($1

Cost of Equity, Debt, Weight of Debt & Weighted Cost of Capital

How would you calculate the cost of equity, cost of debt, weight of debt and weight of debt and weighted cost of capital with the following given information. debt-to-equity ratio = .25 beta of common = 1.15 beta of debt = .3 market risk of premium = 10% risk-free rate = 6% corporate tax rate = 35% weight of equity = 80

Cash Flow

My company is considering buying new equipment with a cost of $625,000 and a salvage value of $50,000 at the end of its useful life of ten years. The equipment is expected to generate additional annual cash flow for ten years with the following possibilities: Probability Cash Flow .15

Pay Back Period

Superior Manufacturing is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including labor and materials will be 55% of sales. Indirect incremental costs are estimated at $80,000 a year. The project requires a new

Avoiding Derivative Issuance

The common stock of ABC has a beta of 1.20. The risk-free rate is 5 percent, and the market risk premium (Km - Krf) is 6 percent. This year's addition to retained earnings is $3,000,000. The company's capital budget is $4,000,000 and its target capital structure is 50 percent debt and 50 percent equity. How large of a ca

Financial Model Evaluation

There are two scenarios that I need assistance with. They are attached on one document. I need the solutions and answers to the questions.

Capital Budgeting in Excel

1. If two mutually exclusive projects were being compared, would a high cost of capital favor the longer-term or the shorter-term project? Why? If the cost of capital declined, would that lead firms to invest more in longer-term projects or shorter-term projects? Would a decline (or increase) in the WACC cause changes in the

Capital Investment Mini case study.

Conch Republic Electronics Spent $750.00 to develop a prototype (or Model) for a new PDA Spent an additional $200,000 for marketing study to determine the expected sales. Can manufacture the new PDA with variable cost for $86.00 each. Fixed Costs for the operation are estimated at $3 million per year. Unit Price

Monetary Policies

I am trying to write a paper on monetary policies and need some help understanding how expansionary and contractionary monetary policies impact the various components of U.S. economy. For example the effects of monetary policy on consumers, households, businesses, GDP, unemployment, budget, and trade deficits.

Capital Budgeting -- Tanning Beds

Patsy a call to Sun-quest Inc., the salesman, Mike, who answered the call was extremely helpful, courteous, and convincing. "Let's say I do start the tanning service at my salon, Mike, should I go in for the less expensive tanning bed or the more expensive tanning dome?" asked Patsy, eager to sort out her dilemma. "Well," respo

Role of the Financial Manager

Role of the Financial Manager Evaluate the role of the financial manager in maximizing shareholder value within today's financial markets. Compare the financial manager's viewpoint with the viewpoint of an employee or stockholder with regard to maximizing share value.

Decision process for eliminating a product at Working Computers Inc.

The full detail of the question has been attached. 1. Given the unit sales information in Exhibit 1, develop an annual revenue forecast for 2004 through 2009. Forecast sales first assuming that the revised Bernoulli will be introduced one year from today, and then create a forecast which is based on sales of the current model

NPV and IRR calculation for Sam Adams

Calculate NPV and compare to IRR. The following data have been collected by a task force of capital budgeting analysts at Sam Adams Ltd. Concerning the drilling and production of known reserves at an off-shore location: Investment in rigging equipment and related personnel costs required to pump the oil $4,900,0

1. Two companies, A and B, have the following balance sheet accounts:

BELOW ARE TWO PROBLEMS THAT I NEED SOLVED. I HAVE ALSO ATTACHED A WORD DOCUMENT WITH THE PROBLEMS IN FORMAT THAT IS EASIER TO UNDERSTAND. THEY ARE ALSO LOCATED IN PDF FORMAT ON PAGE 170 THANKS. 1. Two companies, A and B, have the following balance sheet accounts: A B Current assets $ 150 $ 800 Fixed assets 300 2200 Curr

Evaluating a Project using NPV

Consider this project with an internal rate of return of 13.1 percent. Should you accept or reject the project if the discount rate is 12%? Year Cash Flow 0 +$100 1 -60 2 -60

Calculating Present Value of Property

You can buy property today for $3M and sell it in 5 years for $4M. (no rental income on the property) a. If the interest rate is 8%, what is the present value of the sales price? b. Is the property investment attractive to you? Why or why not? c. Would your answer to (b) change if you also could earn $200,000 per year re

Investment Strategy Changes

Can you give me some recommendations for some changes in an organizations investment strategy in order to improve its investment performance?

Financial Management: Budgeting and Personal Finance

Capital budgeting c. fields is considering installing solar panels on his house to decrease his electricity costs. Chester has a proposal that will cost $25,450.00 for a complete installation. Engineers have estimated that he will save an average of 26% from his electricity use from the grid.the engineers have projected that

Capital Budgeting

A company wants to maximize the combined Net Present Value (NPV) of a maximum of 6 opportunities that require up to 6 yearly investments. In each year there is only a limited amount of money available. All amounts are give in millions of dollars. Interest rate is 5%.

Let's say I just won the lottery...

Let's say I just won the lottery and I'm suppose to receive $2,000 five years from now. At an interest rate of 6%, what is that $2,000 worth today?

New Project Analysis: Capital Budgeting

You have been asked to evaluate the proposed acquisition of a new spectrometer for the firm's R&D department. The equipment's basic price is $70,000, and it would cost another $15,000 to modify it for special use by the firm. The spectrometer, which falls into the MACRS 3-year class, would be sold after 3 years for $30,000. U

Homework Problems

1. Gibson Company has tow production departments, Mixing and Finishing, served by a maintenance department. Bugeted fixed costs for the maintenance department were $30,000, and the variable cost per labor hour was $4.00. Other relevant data is as follows: Mixing Finish

Working Capital & Operating/Cash Conversion

The Latigo Company has the following financial information: a. The current assets to sales ratio for the industry is 0.20. State whether Latigo make more or less use of working capital than the industry. b. Compute the working capital turnover for Latigo and for the industry. c. Compute the operating cycle and the