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Capital Budgeting

Buy vs Lease scenario

The management of Kitchen Shop is thinking of buying a new drill press to aid in adapting parts for different machines. The press is expected to save Kitchen Shop $8,000 per year in costs. However, Kitchen Shop has an old punch machine that isn't worth anything on the market and that will probably last indefinitely. The new pr

Budget Assignment

A. Identify the stages of the budgeting process and evaluate their effectiveness. b. Evaluate the level and validity of detailed assumptions used to create budget estimates. c. Discuss the role of the budget as an analytic tool that can be used to evaluate organizational performance. d. Explain h

Capital Expenditures

Why do most companies prefer to use the present value or internal rate-of-return methods to value capital expenditures, rather than the payback method or average return on assets or equity methods? In compiling the forecasts for the annual cash flows in a capital expenditure solution, interest or depreciation are not include

Capital Investment Decisions

Should We Purchase That New Copier? Campus Print Shop is thinking of purchasing a new, modern copier that automatically collates pages. The machine would cost $22,000 cash. A service contract on the machine, considered a must because of its complexity, would be an additional $200 per month. The machine is expected to last eig

Quantitative Methods

Consider a capital budgeting example with 5 projects from which to select. Let x1 = 1 if project a is selected, 0 if not, for a = 1, 2, 3, 4, 5. Conditions are independent. Projects cost $100, $200, $150, $75, and $300 respectively. The budget is $450. Write the appropriate constraint for the following condition. If project 1 is

FINANCE MANAGEMENT

Superior Manufacturing is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including labor and materials will be 55% of sales. Indirect incremental costs are estimated at $80,000 a year. The project requires a new

NPV & IRR question

Solution required for this question Question 1: Capital Expenditure Decisions and Investment Criteria Sunrise Ltd Sunrise Ltd is an electronics company that manufactures and markets a range of innovative products. Its success is based to a large extent on the ability of a small development groups to generate ideas fo

Long-Term Financial Management Decisions

Superior Manufacturing is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including labor and materials will be 55% of sales. Indirect incremental costs are estimated at $80,000 a year. The project requires a new

What is correct capital budgeting criterea?

What is correct capital budgeting criterea when considering the priority or ranking of a capital project? Secondly, how do you adjust your capital budgeting criterion to account for the riskiness of a project?

Describe the leadership and management functions as relates to Mr. Big?

Describe the leadership and management functions and style as it relates to a multifaceted project touching upon project planning, development, management, and completion based on the qualifications of the applicant. The manager is hands on, team orientied, and uses a participative style of management, and after receiving fee

NPV and IRR

1. ABC plc is evaluating project A on which it has recently spent £6000 on R&D, which is irrecoverable. Moreover, the company auditor proposes to charge a contribution to sales force overheads of £3,000 to the project. Unfortunately, for the project to proceed, ABC needs to spend an additional £10000, which can be written dow

Capital Budgeting and Ratio Analysis

(See attached file for full problem description) --- On these questions I need some help showing the steps needed to finish the problems. Please make sure that you understand theses concepts and steps? 1 What is the present value of the following cash flows at an 8% discount rate/required rate of return? ye

Net Present Value

Harper Company is contemplating the purchase of a machine capable of performing certain operations that are now performed manually. The machine will cost $5,000, and it will last for five years. At the end of the five-year period, the machine will have a zero scrap value. Use of the machine will reduce labor costs by

Fixed and Current Assets: Evaluations of Performance.

Fixed and Current Assets: Evaluations of Performance. Metro Hospital has been under pressure to keep costs down. Indeed, the hospital administrator has been managing various revenue-producing centres to maximize contributions to the recovery of operating costs of the hospital as a whole. The administrator has been consider

Present value of streams of payments

Assuming an interest rate of 10%, calculate the present value of the following streams of yearly payments a) $1,000 per year, forever, with the first payment one year from today b)$500 per year, forever, with the first payment two years from today c)$2,420 per year, forever, with the first payment three years from today

Managerial accounting

Please help with the following managerial accounting problem. Provide step by step calculations. Your company plans to acquire one of two assets. asset a costs $162,500 and has expected annual cash savings of $37,500. asset b cost $225,000 and has expected annual cash savings of $77,500. You'll use the straight-line deprecia

Market Analysis

Please provide an assessment of the financial feasibility of marketing a key prescription medication to new market segments (perhaps a medication just received a new indication) including any required investment and available sources of capital. Thank you

Both the future and present value of a sum of money are based on?

These are questions that I cannot seem to find the answer to. Any sort of help would be greatly appreciated! --- Both the future and present value of a sum of money are based on? Interest rate Number of time periods Both interest rate and number of time periods None of the above mentioned What is an annuity? More

NPV and IRR of an investment

Investment Criteria. If you insulate your office for $10,000, you will save $1,000 a year in heating expenses. These savings will last forever. a. What is the NPV of the investment when the cost of capital is 8 percent? 10 percent? b. What is the IRR of the investment? c. What is the payback period on this investment

Capital investment evaluation for mutually exclusive project

20.) Miller Electronics is considering two new investments. Project C calls for the purchase of a coolant recovery system. Project H represents an investment in a heat recovery system. The firm wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows: Project C ($

Present the rhetorical triangle

Audience: Fifty students who have neither seen the Classroom Materials nor read the readings for this unit Topics: The Rhetorical Triangle, the speaker, the audience, the topic/setting Rhetorical Triangle: The dynamic relationship among the speaker, the audience, and the topic/setting is known as the Rhetorical Triangle.

Labor Econ

Congress frequently considers proposals to reduce the rate at which capital gains are taxed (i.e. lowering the costs of capital). Proponents believe that the reduced capital gains tax rate would encourage businesses to expand and hire more workers. Opponents argue that such a tax cut would primarily benefits stockholders. Althou

Multiple choice, please show the work if you can

Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. You are given the following data: r* = real risk-free rate = 4% Constant inflation premium = 7% Maturity risk premium = 1% Default risk premium for AAA bonds = 3% Liquidity premium for long-term T-bonds

Logistics / production & operations management

Subject: Logistics / Production & Operations Management 1 file attached: (1) "Claris -- answers.xls" --- This file includes 3 different worksheets: one worksheet states some numerical facts from the case; another worksheet has my notes on areas of improvement I think Claris should consider; and the other worksheet has a sp

Labor Economics

Congress frequently considers proposals to reduce the rate at which capital gains are taxed (i.e. lowering the costs of capital). Proponents believe that the reduced capital gains tax rate would encourage businesses to expand and hire more workers. Opponents argue that such a tax cut would primarily benefits stockholders. Althou

NPV/IRR/Profitability Index

Consider the data on the following two mutually exclusive projects under consideration by the Stephen Company: Year Project A Project B 0 -30,000 -60,000 1 10,000 20,000 2 10,000 20,000 3 10,000 20,000 4 10,000 20,000 5 10,000 20,000 The cost of capital is 14%.

6 Finance Problems: Calculate WACC, NPV, cash flow, EAA, IRR, abandonment value

Hilliard Corp. wishes to calculate its weighted average cost of capital. The firm's CFO has gathered the following information: ? The firm's long-term bonds currently offer a yield to maturity of 8%. ? The company's stock price is currently at $32 per share. ? The most recent dividend at t= 0 was $2 per share. ? The dividend

Estimating the Cost of Capital

Over the past few years, My Company has been too constrained by the high cost of capital to make amny capital investmens. However, recently, capital costs have been declining, and the company has decided to look at a major expansion program. The information below is provided to estimate the company cost of capital: 1. T