1. The capital budgeting department is contemplating whether to purchase a piece of equipment. The new piece of equipment costs $900,000. The equipment currently being used by the firm would be replaced by the new and would be sold for $100,000 which is the firm's book value for the asset. The estimated useful life of the new eq
Please review all of the problems and make sure they can all be answered correctly before taking on this assignment. I will only need to see the math work for problems 2 and 4. 1. Which one of the following is possible if Blockbuster Video cuts its DVD rental rates by 20%? A) Its fixed costs will decrease. B) It profit w
Question 1 Apex Ltd. is an Australian operated company with mainly American resident shareholders. The company is currently in the process of comparing two mutually exclusive machines for use in a new project with Machine A costing $30,000, having a useful life of five years and machine B costing $45,000 and having a useful l
Summary given in attachments "Page2" and "Page3." Questions given in attachment "Page4" Example: 1. Consider the land acquistions for Stage 1. a) What cosem if any, should be attributed to the catfish project? b) Assuming that the currently owned site is used for this project, how s hould the Gulf Shrimp Processing Divis
For the following assignment, I am tasked to analyze the company, Genworth Fin ancial. I would like some assistance with understanding key elements of the assignment so that I can successfully write this lengthy paper. I have provided the website of the company which includes key financial data. http://investor.genworth.
Capital Budgeting: This is an application of capital budgeting that integrates the projection of a basic cash flow and the computation and analysis of six capital budgeting tools. Your company is thinking about acquiring another corporation. You have two choices; the cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an option. The following are your critical data:
This is an application of capital budgeting that integrates the projection of a basic cash flow and the computation and analysis of six capital budgeting tools. Your company is thinking about acquiring another corporation. You have two choices; the cost of each choice is $250,000. You cannot spend more than that, so acquir
I have 11 capital projects that are all being analyzed except one. I am attempting to explain why this project was not evaluated. I then need to calculate the NPV (discounted at the WACC) and the IRR of the project. Then I need to decide if the project should be undertaken and why or why not. The estimated WACC as of January
Project A: present value (PV) of cash inflows is $55,000 and the PV of the cash outflows is $50,000. Project B: PV of cash inflows is $24,000 and the PV outflows is $20,000. All of the following are true except ______. the net present value of Project A is $5,000, the net present value of Project B is $4,000, the profita
IT and Information Management Case #2 ROI The company ACME Real Estate (ARE) provides real estate services including property sales, leasing, and management; corporate services, facilities, and project management; mortgage banking; investment management and capital markets; appraisal and valuation; and research and consu
In general, the value of land currently owned by a firm is irrelevant to a capital budgeting decision because the cost of the property is a sunk cost? a. True. b. False.
Has option analysis become more or less important for capital budgeting analysis in recent years?
Why is the net present value method the optimal capital budgeting method?
Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Since both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to opera
Given the following project cash flows, identify the correct statement(s). The firm's cost of capital is 15%. Cash Flow 0 -50 1 150 2 75 3 -10 I. This project will have two IRRs. II. The NPV of the project is $180.57. III. The profitability index of the project is 2.61. IV. The payback period of
1) Calculating yield and years till maturity 2) Analyze the risk of a portfolio 3) Calculate IRR 4) Calculate NPV and IRR 5) Calculate project cash flows, NPV, and IRR 6) Calculate the Weighted Average Cost of Capital 7) Determine the capital structure of a firm 8) Analyze an IPO 9) Calculate break-even points 10) Calculate and analyze the degree of operating leverage
1) Calculating yield and years till maturity Fill in the table below for the following zero coupon bonds. The face value of each bond is $1,000. Yield to Price Maturity Maturity $300 30 ? $300 ? 8% ? 10 10% 2) Analyze the risk of a portfolio Use the data below and consider portfolio
A company plans to acquire a piece corporate aircraft costing $5,000,000. The aircraft is expected to save the company $1,200,000 per year for each of its 5 year useful life. It will be depreciated straight line over 5 years. The firm's cost of capital is 12%. Its tax rate is 40%. It will replace another aircraft that was acquir
1. How would you define and quantify risk as used in capital budgeting analysis and what is the purpose of using sensitivity analysis?
Capital Budgeting- 30 questions on Capital Budgeting- Discounted Payback, NPV, Investment, IRR, modified , point of indifference, internal rate of return (MIRR), WACC, risk-adjusted discount rate
Please assist me with the following problems relating to discounted payback, NPV, investments and more. 1. Haig Aircraft is considering a project which has an up-front cost paid today at t = 0. The project will generate positive cash flows of $60,000 a year at the end of each of the next five years. The project's NPV is
Hercules Exercising Equipment Co. purchased a computerized measuring device two years ago for $60,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $23,800. A new piece of equipment will cost $150,000. It also falls into the five-year category for MACRS depreciation. Ass
Explain if you think they're good or bad.
1. List and briefly describe the four components of working capital? 2. What is zero working capital and why would a company strive to achieve this? 3. Explain cash flow synchronization and at least 2 techniques that would be used to accomplish this. 4. Identify and briefly define the four variables of credit poli
Question: Explain how the concept of risk can be incorporated into the capital budgeting process.
Does capital rationing impact maximization of shareholder wealth? Explain.
The directors of Makeit Ltd. Propose to buy a machine costing $300,000. At the end of 5 years the machine will be sold for $ 50,000. In each of the 5 years the machine will increase revenue by $160,000. Increased annual expenditure of $ 80,000 will be incurred. Makeit Ltd. will require an increase in working capital of $40,000.
Although he was hired as a financial analyst after completing his MBA, Richard Houston's first assignment at Chicago Valve was with the firm's marketing department. Historically, the major focus of Chicago Valve's sales effort was on demonstrating the reliability and technological superiority of the firm's product line. Howeve
Find the value (i.e., savings or loss) of purchasing and running the new boat for 15 years (instead of the Cynthia II).
Graham Dodd, the controller of the New Economy Transport Company was evaluating a replacement of the Cynthia II, one of the boats NETCO used to push barges up and down the Mississippi and Ohio Rivers. The Cynthia II was carried on their books at a net value of only $30,000, but it could probably be sold 'as is' along with an ext
"Capital Budgeting" Answer the following questions: 1)There is uncertainty in the market research forecasts from which you derive information to include in your own volume and price inputs for a financial proposal. How do you incorporate this uncertainty into your analysis? 2)If the land, which would be used for t
Your company is thinking about acquiring another corporation. You have two choices: the cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an options. The following are your critical data: a. Corporation A: 1) revenues = 100K in year one, increasing by 10% each year. 2)
Each answer should be between 200-300 words. 1. What is the concept of marginal cost of capital? 2. Would you expect the cost of capital to be different for an e-business versus a "brick and mortar" business? Why? 3. How would you modify your capital budgeting decision analysis to account for periods of inflation?
Capital Budgeting-proposed acquisition of a new special- purpose truck: net investment in the truck, operating cash flow in Year 1, terminal year non-operating cash flows, NPV,
You have been asked by the President of your company to evaluate the proposed acquisition of a new special- purpose truck. The truck's basic price is $50,000, and it will cost another $10,000 to modify it for special use by your firm. The truck falls in the MACRS 3-year class, and it will be sold after three years for $20,000. T