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Capital Budgeting

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

Corporate Finance

Compose a memo to the CEO explaining the investment decision tools that are used by corporations. Use various investment decision tools.

Capital budgeting

Which capital budgeting technique is consistent with maximizing shareholder wealth and why?

NPV

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

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.

Desert Coffee Roasters and Pro Forma Financial Statements

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

Text Problems on Unifying Concepts

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.

Profit maximisation and wealth maximization

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.

Financial Calculation Questions:

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

Cash flow

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

Cash flow statement

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

If the appropriate discount rate is 10%, what is the NPV of the contract?

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

determine the company's optimal capital budget

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

Cost Accounting Problem

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

Maintain residual dividend policy and keep optimal capital

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

The Task and Risk Management Plan

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

International Environment and Capital Budgeting Decisions

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.

Average rate of return method

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

Capital Budgeting: What is IRR and Payback period

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

Capital budgeting

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

Investment Portfolio Research

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

Change Model

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