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Capital Budgeting

Determining payback period, discounted payback period, etc

Determine the payback period, discounted payback period, NPV, profitability index, IRR from sample #1 attached Use the following data to for 1,2,3 4,5 below: Undiscounted Year Free cash flows 0 (350,000) 1 10,000 2 40,000 3 80,000 4 100,000 5 120,000 6 80,000 7 100,000 Required rate of return = 8% 1. The payback p

What are earnings if the owners put up the $100? Firm's weighted-average cost of capital at various combination of debt and equity. What is the firm's optimal capital structure? If the net present value method is used, which investment(s) should the firm make? Construct a pro forma balance sheet that indicates the firm's optimal capital structure.

Firms' weight average cost of capital and other questions: 1. A firm needs $100 to start and expects: Sales $200 Expenses $185 Tax rate 33% of earnings a. What are earnings if the owners put up the $100? b. If the firm borrows $40 of the initial at 10%, what are the profits rece

Discussion analysis

Need to discuss my findings for the following problems. Discussion should be 1 paragraph long for both questions. (See Attachments) --- 1. Edelman Engineering is considering including two pieces of equipment, ________________________________________ Edelman Engineering is considering including two pieces of equipment, a t

Time-phased budget for implementing software. Identify the primary cost drivers

Practice problem- no grade Revise Excel Spreadsheet (attached) to a time-phased budget for implementing software. Identify the primary cost drivers. Do not need to worry about depreciation of the software. Need to focus on understanding what the costs are, and when those costs will be incurred during the implementation pr

Capital Budgeting: The payback period, NPV and Profitability Index

A company is considering replacing a five-year old machine that originally cost $50,000, presently has a book value of $25,000 and could be sold for $60,000. This machine is currently being depreciated using the simplified straight line method down to a terminal value of zero over the next five years, generating depreciation of

Suppose you are the chairperson of the Fed's Board of Governors...

Suppose you are the chairperson of the Fed's Board of Governors at a time when the economy is depressed, and you are called to testify before a congressional committee. Write an explanation for an interrogatory senator outlining how your expansionary acts would operate and what would be the effects on the economy?

Capital Budgeting

5 questions on NPV, IRR, Cost of Capital, Financial planning (See attached file for full problem description) --- 1. Banner Forklift, Inc. has identified the following two mutually exclusive projects: (a) Apply NPV and IRR to decide which of these two projects you would accept. The required return on the project is 1

Cash Equation, Cash Collections, Capital Structure...

1. Cash Equation. Stabbing Westward Company has a book net worth of $21,000. Long-term debt is $5,000. Net working capital, other than cash, is $8,500. Fixed assets are $8,000. How much cash does the company have? If current liabilities are $4,000, what are current assets? 2. Calculating Cash Collections. The following i

Internal Rate of Return

Katie, 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 the space in it. She received rental income of $8,000 for each of the four years and then sold the building this year f

ROI

What ROI would you expect on a new strategic program or service?

Critical Data Sources

In evaluating the implementation of a new strategic initiative in an organization, what would be the critical data sources you would utilize to predict financial performance?

Budgeting behavioral implications

Budgeting behavioral implications Crunch numbers is a manufacturer of calculators In the budget setting process, budget A was put together by lower and middle management. Budget B was put together by senior management. A B Unit sales 20,000 30,000 dollar sales $600,000 $900,000 less variable expenses:

Working capital management and Operating cycle

Q1 Two companies, A and B, have the following balance sheet accounts: A B Current assets $ 150 $ 800 Fixed assets 300 2200 Current liabilities 75 600 Long-term debt 75 1000 Equity 300 1400 a. Compute values for all of the ratios that measure working capital for firms A and B. b. Compare Firm A to B with regards to its

Profitability Index

Colorado Texas New Line Replace Acquire Pollute Cumulative NPV 0 $(1,319,000) $(3,534,000) $(1,582,000) $(4,845,000) $(24,050,000) $(1,650,000) 1 $(233,318) $(583,296) $465,263 $661,105 $4,374,354 $- 2 $525,358 $1,260,859 $766,303 $831,781 $3,146,041 $- 3 $480,408 $1,104,938 $725

Capital budgeting

The Woodruff Corporation purchased a piece of equipment three years ago for $230,000.It has an asset depreciation range(ADR) midpoint of eight years.The old equipment can be sold for $90,000. A new piece of equipment can be purchased for $320,000.It also has an ADR of 8 years. Assume the old and new equipment would provide

Capital budgeting - relevant cash flows

I saw almost the same Question in the solution library but it only had brief answers, no formulas, explanations, etc. I'd love some nice walking through with this one, if you will :) Graphic Systems purchased a computerized measuring device two years ago for $80,000.It falls into the five year category for MACRS depreciation.

Difference between IRR and PI? Lease or Buy?

What are some differences between IRR and PI? What would Lisa Cross say about IRR? Why would an organization choose to lease an asset instead of buying it? Refer to the text and article by D.O. Burgess.

Capital Budgeting and Derivatives

It is August 8, 2005. You are a Financial Advisor. On July 20, 2005, you were contacted by management of Growing To Fast, Inc. (Company). They have asked you to help them turn the Company around. The Company has been in existence for 30 years manufacturing widgets that are used in the aerospace industry. The Company had be

Master's level Capital Budgeting

I need assitance in identifying the formulas needed to resolve my problem. (See attached file for full problem description) --- Jane Burns and Carl Foster started a computer store several years ago. The first couple of years were excellent, but then they began to fell the pressure of increasing competition; volume and

Investment Criterion

Please review my computations. I need help with 15 d and 15 e, please. (See attached file for full problem description)

Depreciation method, Payback, Equal annual payments, NPV and IRR

PROBLEM #1A Given the data below, identify the depreciation method used for each depreciation schedule as of the following (please note that it is not necessary to show all calculations, but enough to show how you know which method is represented):   First cost  $80,000 Book depreciation l

Finance Problems

Which of the following component costs is expressed on an after-tax basis in the calculation of a firm's cost of capital? a. cost of debt b. cost of preferred stock c. cost of common equity d. b and c e. all of the above The component cost of a firm's preferred stock consists of a. the cur

Clearaway Upholstery: calculate investment alternatives for cash flows

QUESTION - CLEARAWAY UPHOLSTERY LIMITED a) Calculate the initial investment associated with each alternative. b) Calculate the incremental operating net cash inflows associated with each alternative. c) Calculate the terminal cash flow at the end of five years associated with each alternative. d) Make a recommend

Capital Budgeting decision and NPV

You have been asked by the president of your company to evaluate the proposed acquisition of a new hydropropolaser for the R&D department. The price for this equipment is $70,000, and it would cost another $14,000 to modify it for special use by your firm. The hydropropolaser, which has a MACRS 3-year recovery period (wts. 3