1) For a capital budgeting proposal, assume this year's cash sales are forcast to be $220, cash expenses $130, and depreciation $80. Assume the firm is in the 30% tax bracket. Is it possible to determine the projects after tax cash flow. 2) A restaurant is considering an expansion. Construction will cost $90,000 and will be d
1) A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's NPV? (Hint: begin by constructing a time line.) 2) What is the project's discounted payback period?
Welon Industrial Gas Corporation supplies acetylene and other compressed gases to indusrty. Data regarding the store's operations follow: -Sales are budgeted at $360,000 for November, $380,000 for December and $350,000 for January. -Collections are excepted to be 75% in the month of sale, 20% in the month following the sal
21. Software Systems is considering an investment of $20,000, which produces the following inflows: Year Cash Flow 1 $11,000 2
I have four multiple choice questions that I am stumped on when it comes to my Study Guide. The book that was used in the class was the 18th Edition Fundamental Accounting Principles by Wild Larson and Chiappetta. This four multiple choice questions have been giving me the run around. Thanks in advance. See the attached.
What are the various discounted cash flow valuation methods and how do you use the methods in capital budgeting.
A) Is one method better than another? B) Why or why not, please explain.
Value of $20,000 is to be received in a year at 4% compounded annually, and im suppose to round it off. My answer was 800. I multiplied 20,000x4%.
Urgent > Please Help. Write a 350-word summary, in which you answer the following questions: a. Besides net present value (NPV) and internal rate of return (IRR), what other criteria do companies use to evaluate investments? b. What are the disadvantages of NPV as an investment criterion? c. How will the change in co
An expansion will require company to purchase today (t=0) 5 mill. of equipment. the equipment will be depreciated over 4 yrs. Year1 33% Year2 45% Year3 15% Year4 7% The expansion will require the company to increase its net operating working capital by 500,000 today (t=0) this net operating working capital will be re
8. Using the constant growth model, a firm's expected (D1) dividend yield is 3% of the stock price, and it's growth rate is 7%. If the tax rate is .35%, what is the firm's cost of equity? a) 10% b) 6.65% c) 8.95 % d) More information is required. 13. Assume a corporation has earnings before depreciation and taxes
The IRR and NPV rules always lead to identical decisions if: a. The project's cash flows are conventional. b. The projects are mutually exclusive. c. The projects are independent. d. Both (a) and (b). e. Both (a) and (c). One investment opportunity should be rejected if its NPV is ________ and its IRR is ________. a. P
Consider the following two mutually exclusive projects, each of which requires an initial investment of $100,000 and has no salvage value. The organization, which has a cost of capital of 15%, must choose one or the other (see attached) Cash Inflows (End of year) Year Project A Project B 1 $30,000
There are two independent investment projects for the Galactic Empire. Project A costs the Empire $300,000 to set up, and it will provide annual cash inflows of $70,000 for 7 years. Project B costs the Empire $1,000,000 to set up, and it will provide annual cash inflows of $255,000 for 6 years. The Empire's cost of capital (i
Year Project A Project B 0 -$250,000 -$400,000 1 $100,000 $50,000 2 $80,000 $70,000 3 $60,000 $80,000 4 $40,000 $120,000 5 $20,000 $200,000 The above are two mutually exclusive investment projects for Rebel Alliance. The Alliance requires getting their invested amount fully paid back within 5 years. The Alli
Ferengi, Inc. is subject to an applicable corporate tax rate of 35 percent, and the weighted average cost of capital (WACC) of 12.5 percent. 1) Ferengi is currently contemplating two capital investment plans. Plan A: the upgrade of an information system with an installed cost of $2,400,000. The upgrade system will be deprec
Please help by providing a 125-word response to each of the following questions: How does a capital budget originate and what is it suppose to accomplish? How are corporate responsibilities divided in preparation of the budget? What are the advantages and disadvantages of the budget originating from top executive o
Question 20 Beguiling Telecom Corp.'s customers send payments by check, which spend an average of 2 days in the mail. Processing of the checks requires 2 days, and BTC's bank delays availability of the checks for 2 days. Customers send their checks an average of 5 days after they receive their statements. Beguiling Telecom has
I need assistance with the attached two part assignment. I have also attached an example Spreadsheet. References: http://www.12manage.com/methods_npv.html Do you think finance departments are the best place to train future CEOs? Include a discussion of both the pros and cons of hiring a CFO to be CEO. Try to cite at
IS THE BEST ANSWER FOR THIS A or B ?? thanks! Cherry Books is considering two mutually exclusive projects. Project A has an internal rate of return of 18 percent, while Project B has an internal rate of return of 30 percent. The two projects have the same risk, the same cost of capital, and the timing of the cash flows i
If an airline company has a profit before taxes of $1 million flying at 80% of capacity with revenue of $100 million, fixed cost of $69 million and variable cost of $30 million. What is the before tax profit at 90% capacity? What is the contribution margin in dollars of Airline at revenue of $100 million? If an organizati
How does cost of capital financing techniques affect the organization? How do you use capital budgeting and relevant cash flow to compare investment alternatives?
Discuss the relative merits of using the NPV over IRR. Why is one favored over the other? Under what circumstances would one use the MIRR? Which is your preferred technique and why? Explain.
1. Using NPV, I need to conduct a straight financial analysis of the investment alternatives and rank the projects. Which NPV of the three should I use? Why? Help me suggest a way to evaluate the Effluent project. 2. What aspects of the projects might invalidate the rankings derived? How should I correct for each investm
Explain how to apply discounted cash flow techniques to determine the value of money.
A junior executive is fed up with his boss's operating policies. Before leaving the office of his angered superior, the young man suggests that a well-trained monkey could handle the trivia assigned to him. Pausing a moment to consider the import of this closing statement, the boss is seized by the thought that this must have be
Benford, Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease the needed space in the mall. Equipment and fixtures for the store will cost $200,000 and be depreciated over a 5-year period on a straight-line basis to $0. The new store will require Benford to increase its net working capital b
Calculate the net present value and profitability index of a project with a net investment of $20,000 and expected net cash flows of $3,000 a year for 10 years if the project's required return is 12 percent. Is this project acceptable?
Comparing Investment Criteria Consider the following two mutually exclusive projects: Year Cash Flow A Cash Flow B 0 -$257,851 -$31,827 1 25,500 11,483 2 57,000 12,954 3 51,000 11,412 4 405,000 9,674 Whichever project you choose, if any, you require a 15 percent return on your investment. Required:
NPV and IRR Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 -$ 468,000 1 183,000 2 208,000 3 223,000 4 201,000 All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the
1 Prepare a December 31 balance sheet using the following data: The par value of the firm's common stock is $100. Cash $ 4,000 Patents 82,000 Accounts payable 6,000 Accounts receivable 8,000 Taxes payable 2,000 Machinery 34,000 Bonds payable 7,000 Accumulated retained earnings 6,000 Capital surplus 19,000 2 Calcul