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
Compose a memo to the CEO explaining the investment decision tools that are used by corporations. Use various investment decision tools.
Which capital budgeting technique is consistent with maximizing shareholder wealth and why?
Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept/reject decision for each.
1. Elderman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $17,100, and that for the pulley system is $22,430. The firm's cost of capital is 14 percent. After tax cash flows, includi
1.Project K has a cost of $52,125, its expected net cash inflows are $12,000 per year for 8 years, and its cost of capital is 12 percent. (Hint: Begin by constructing a time line) a. what is the projects payback period (to the closest years)? b. what is the projects discounted payback period? c. what is the projects npv?
Graphic Systems purchased a computerized measuring device two years ago for $80,000.00. It falls into the five-year category for MACRS depreciation. The equipment can currently be sold for $28,400.00. A new piece of equipment will cost $210,000.00. It falls into the five-year category for MACRS depreciation.
Please see attachments for instructions and details. Thank you. Based on the data provided in the Cumulative Case Study: Desert Coffee Roasters, Inc.: a. Select the relevant financial data. b. Using Excel, prepare 3 years of pro forma financial statements (balance sheet, income statement, and statement of cash flows). Use
What is the required rate of return (yield) on the preferred stock? If Mr. Felgate's opportunity cost (potential return) is 10%, what is the present value of his consulting contract? If the required rate of return by common stockholders (Ke) is 12%, what is the price of the common stock? Compute the price of the bonds based on semiannual analysis. Use the net present value profile to approximate the value for the internal rate of return. Determine the net present value of the project based on a 10% discount rate.
1) Hosto Consulting has preferred stock outstanding that pays a $8 annual dividend. It has a price of $75. What is the required rate of return (yield) on the preferred stock? 2) Don Felgate retired as president of Wells Snack Vending Company but is currently on a consulting contract for $35,000 per year for the next 10 years.
Unifying Concepts: Net Present Value and Internal Rate of Return Methods Julie Kowalis, an investment analyst, wants to know if her investments during the past four years have earned at least a 12% return. Four years ago, she had the following investments: a. She purchased a small building for $50,000 and rented space in it.
Explain why profit maximisation fails to be consistent with wealth maximisation. Include reasons why profit maximsation and/or wealth maximisation or may not be appropriatte corporate goals in your explanation.
QUESTIONS: * A corporation is planning an expansion project that it desires to finance with newly issued preferred stock. The firm has an outstanding issue of preferred stock that pays a dividend of $4.25 per share, which is trading for $65 a share. The investment bankers have advised Seven Eleven that flatation costs will be
Green Grocers is deciding among two mutually exclusive projects. The two projects have the following cash flows: . Year Project A Cash Flow Project B Cash Flow 0 -$50,000 -$30,000 1 10,000 6,000 2 15,000
I need to find out the net present value of the cash flows and also the internal rate of return on the cash flows. Here are some more info: The purchase price of the company is $5.74 million dollars and it as shown as an "addition to PP&E" in year 0 - The $2.7 million dollar inflow in year 1 shown under "disposals of
Global Technology is considering investing in a new computer system. The system would be used for all of the firm's business applications and is expected to yield the following (incremental) benefits (with all other yearly flows remaining constant): * Additional sales revenue of $50,000 per year, given the fact that the s
Today a firm signed a contract to sell a capital asset for $90,000. The firm will receive the payment five years from today. The asset costs $60,000 to produce, payable immediately. a. If the appropriate discount rate is 10%, what is the NPV of the contract? b. At what discount rate will the firm break even on the sale of th
Dixie Dynamite Company Ch 13 Problem 10 see attached
Managers are trying to determine the company's optimal capital budget for the upcoming year. The company is considering the following projects: Project Size Rate of Return Risk A $ 200,000 16% High B 500,000 14 Average C 400,000 12 Low D 300,000 11 High E 100,000
Harris Corporation provides the following data on a proposed capital project: Initial investment $200,000 Expected useful life 4 years Increase in annual net cash inflow (before taxes) $66,000 Required rate of return 12% Income tax rate 25% Harris uses straight-line depreciation method with no salvage value. R
1) Driver Corporation has plans calling for a capital budget of $60 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) were $98 million for the year. The firm has $200 million in assets, pays an average of 10 percent on all its debt, and faces a marginal
What are the types of budgets and which type is the most important?
I have written the Project Plan Overview on Uncle Paula's Coffee Nook and selling as a franchdise. I need to do a task and risk management plan and I need to answer the following question in this plan: 1-5 questions 1. specific tasks and milestones required for the project plan of Uncle Paula's 2. five specific project risks
3. What is capital budgeting? How is this process complicated in the international environment? 4. Discuss relevant returns as they relate to financial return perspectives. Provide examples of returns from both the project and parent perspectives.
The capital investment committee of Nature ` s Beauty Landscaping Company is considering two capital investments. The estimate income from operations and net cash flows from each investment are as follows. (see chart in attached file) Each project requires an investment of $80,000. Straight-lin
Evaluate and rank each of the four projects based on (a) payback period, (b) net present value (use a 10% discount rate), and (c) internal rate of return.
11. A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative requires an initial outlay of $100,000. Their cash flows are as follows: Project A Year 1: $10,000 Year 2: $20,000 Year 3: $30,000 Year 4: $40,000 Year 5: $50,000 Project B Year 1: $50,000 Year 2: $40,000 Year
Hoskins is considering the purchase of one of FCS's standard fluid control systems which costs $90,000 including taxes and delivery. It would cost Hoskins another $5000 to install the equipment, and this expense would be added to the invoice price of the equipment to determine the depreciable basis of the system. A life of 5 ye
Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl has frequently run out of cash. This has necessitated late payment on certain orders, which, in turn, is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to hav
I have to research the attached securities and summarize the research results, but I'm having trouble finding information on the Bond and CD. Please help me get started on my research. Also, when researching these types of securities for an investment portfolio, what information should I be looking for and where do I find it
A. Explain where this project (attached) fits on the continuum of short-term, small-scale and long-term, large-scale changes. b. Select an appropriate change model (or change models) for the project. c. Develop a plan to address the human critical success factors for the project. d. Recommend measures to monitor th hu