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Capital Budgeting

Capital Budgeting

You are considering an investment in a project with a life of eight years, an initial outlay $120,000, and annual after-tax cash flows of $52,000. The project also requires an increase in inventories of $22,000. This $22,000 investment in inventory is required at the outset of the project and will be released when the project i

Clark Paints, Inc. Project Part B Capital Budget Decision

Part B: The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $150,000 with a disposal value of $40,000 and would be able to produce 5,000,000 cans over the li

Net Present Value, Payback, Internal Rate of Return

Can you help me get started with this assignment? Consider the following two mutually exclusive projects, each of which require an initial investment of $100,000 and have no salvage value. The organization, which has a cost of capital of 15%, mush choose on or the other. Year Project A Project B 1 $30,000 $0 2 $30,000 $2

"Accounting for Governmental Funds" simulation

Business, Accounting/Business Analysis/Financial Reporting - Other Accounting for Governmental Funds I need assistance with a-d. Please review the attached simulation in order to complete. Please include references. Accounting for Governmental Funds" simulation a. Discuss how the debt capacity of a governmental en

Time Value of Money and Valuing Bonds

Suppose you purchase a ten-year bond with a 6% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yeild to maturity was 5% when you purchased and sold the bond. a. What cash flows will you pay and receive from your investment in the bond per $100 face

Free Cash Flow (PFCFs), NPV and IRR

CT Computers is considering whether or not to begin offering customers the option to have their old personal computers recycled when they purchase a recycling system. The recycling system would require that CT invest $600,000 to purchase grinders and magnets to use in recycling process. The company estimates that for each system

Calculate free cash flow (PFCF), NPV and IRR

Can you help me get started with this assignment? South Tel Communication is considering a purchase of a new software management system. The system is called B-Image, and it is expected to drastically reduce the amount of time that company technicians spend installing new software. South Tel's technicians currently spend 6000

Topic = The pros and cons of static and flexible budgets - instructions below

Introduction: This section will discuss your topic and the purpose of the paper. You will clearly state the problem, issue of concern/interest, or area(s) the paper is seeking to address. Body of Paper: You will use the internet/online library resources to research material to support your paper. You will find a lot of

Answer to student's question about: Capital Budgeting

A firm with a 14 percent WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project A -6,000 2,000 2,000 2,000 2,000 2,000 Project B -18,000 5,600 5,6

Basic Net Present Value Analysis is achieved.

Renfree Mines, Inc., owns the mining rights to a large tract of land in a mountainous area. The tract contains a mineral deposit that the company believes might be commercially attractive to mine and sell. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with op


1. Blanchford Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC = 10%

Net present value with no residual value is determined.

Florence is contemplating the purchase of a soda machine, which will be used to sell soft drinks to customers for $.75 each. The following estimates are available: Initial outlay $3,500 Annual cash inflow $1,000 Cost of capital 10% Estimated life

Determine the net present value of the machine purchase

A company is contemplating the purchase of a machine. The following estimates are available: Initial Outlay $35,000 Annual reduction in mfg. labor cost $8,500 Cost of capital 14% Estimated life of the machine 5 yrs Estimated residual value of machine $2,000 Determi

Calculations Regarding Budgeting in Projects

The final two mutually exclusive projects that Caledonia is considering involve mutually exclusive pieces of machinery that perform the same task. The two alternatives available provide the following set of after-tax net cash flows: Equipment A has an expected life of three years, whereas equipment B has an expected life of

Capital budgeting

I need help with the following issues: how to calculate the net present value and the dollar value per year attach to the intangible benefits? "I am not sure we should lay out $500,000 for that automated welding machine", said JA president of SEC. "That's a lot of money, and it would cost us $80,000 for software and installat

New manufacturing equipment: compute payback period, NPV and IRR

My company is considering purchasing new manufacturing equipment that costs $1300000 and is expected to improve cash flows by $500000 in year 1, $350000 in year 2, $475000 in year 3, $450000 in year 4, $300000 in year 5. Key financial metrics for this capital budgeting project have been calculated and provided by the finance

Rate of return

11. Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows: YEAR PROJECT A PROJECT B 0 -$100,000 -$100,000 1 32,000 0 2 32,000 0 3 32,000 0 4 32,000 0 5 32,000 $200,000 The required rate of return on these projects is 11 percent. 1. What is

Finance: NPV, IRR, Payback

You have two projects. You must calculate the NPV, IRR, and payback for both. These projects may be made up and very simplified but must show numerical examples. Explain the value of NPR, IRR and payback. Of the two projects you've created, which project would you invest in if the projects were mutually exclusive versus independ

Net present value (NPV) of the project ..

I am deciding among two mutually exclusive projects. The two projects have the following cash flows: Project X Year 0 -50,000 Year 1 10,000 Year 2 15,000 Year 3 40,000 Year 4 20,000 Project Y Year 0 -30,000 Year 1 6,000 Year 2 12,000 Year 3 18,000 Year 4 12,000 The company's cost of capital is 10% (WACC = 10%

To Hot to Handle: Case Study - Capital Budgeting

See the case file attached. Exhibit 1 Some Relevant Information Salon Hours: Sunday, Monday Closed Tues-Thurs 9am - 7pm Fri 9am - 5pm Sat 9am - 2pm Advertising Costs $300 per month (Yellow Pages Ad) $200 per month (other advertisements) Patsy's After-tax cost of funds: 11% per year Depreciation method: Straight line

Silicon Arts: Risk Analysis on Investment Decision Simulation

See attached file for simulation. After completing the Capital Budgeting simulation, prepare an APA paper analyzing the risks associated with your investment decision. Included in the analysis of risk should be a mitigation plan for each risk discussed. Focus on concepts learned and applied in the exercise and present the


Write a 3-4 page paper that discusses at least one capital project your organization has taken on. If you cannot find this information, discuss what project or projects you think your organization should take on. Be sure to include a discussion of projected financial costs and benefits. You may use the break-even analysis if

Cost of Capital and Weighted Average Cost of Capital

1. Calculate the after-tax cost of a $25 million debt issue that Pullman Manufacturing Corporation (40 percent marginal tax rate) is planning to place privately with a large insurance company. This long-term issue will yield 6.6 percent to the insurance company. 3. Calculate the after-tax cost of preferred stock for Bozeman-W

Study Questions for Financial Management

See the attached file for problems. FINANCIAL MANAGEMENT STUDY QUESTIONS 1. Current Ratio: How would the following actions affect a firm's current ratio? a. Inventory is sold at cost. b. The firm takes out a bank loan to pay its accounts due. c. A customer pays its accounts receivable. d. The firm uses cash to purchase a