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
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
What are the various financial tools used to evaluate capital projects?
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
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
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
There are two scenarios that I need assistance with. They are attached on one document. I need the solutions and answers to the questions.
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
What would be the correct policy change to reduce the federal government budget deficits and debt? Evaluate this position by using the budget deficits and debt principle.
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
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.
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
Project comparisons, chain of replacement, asset replacement/retirement decision or incremental cash flows.
This case study based on the concept of mutually exclusive projects evaluation - such as project comparisons, chain of replacement, asset replacement/ retirement decision or incremental cash flows. The following formula might be applied to the questions: CFAT = Cash flow after tax CFBT = Cash flow before tax Teff = Effect
Definition and clarification of dividend payment methods, capital and operating expenditures, and capital budgeting terms.
Identify and describe at least two methods that a company can use to provide a dividend to stockholders. Under what circumstances would each of these methods most likely be used? Explain the differences between the US and other countries with respect how firms are structured (capital structure)? Why do these differences ex
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.
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
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
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
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
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
Can you give me some recommendations for some changes in an organizations investment strategy in order to improve its investment performance?
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
Besides net present value and internal rate of return what other criteria can companies use to evaluate investments
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%.
A project has an initial investment of $10,000, with $3,500 annual inflows for each of the subsequent four (4) years. If the required return is 15%, what is the Net Present Value (NPV)?
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?
Is there any reason a company would make an investment when the IRR was lower than the cost of capital?
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
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
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