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    Capital Budgeting

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    Miscellaneous Finance Questions

    1)A state's lottery winner is promised $200,000 a year for twenty years (starting at the end of the first year). How much must the state invest now to guarantee the prize if the state can earn annually 7 percent on its funds? How much must the state invest if the annual payments were made at the beginning of the year? 2)A hom

    Residual Dvidend Model

    Buena Terra Corporation is reviewing its capital budget for the upcoming year. It has paid a $3.00 dividend per share (DPS) for the past several years, and its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 60% equity and 40% debt; it has 1,000,000 share

    Present Value

    On January 1, 2004, Grant Co. issued ten-year bonds with a face amount of $5,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows: 8% 10% Present value of 1 f

    Calculate key financial metrics

    Problem: Strident Marks is considering purchasing new manufacturing equipment that costs $1,300,000 and is expected to improve cash flows by $500,000 in year 1, $350,000 in year 2, $475,000 in year 3, $450,000 in year 4, and $300,000 in year 5. Calculate key financial metrics for this capital budgeting project. Assume a 14% ra

    Project Plan Input

    I need help in addressing the following topics with respect to the attached project plan. Please be clear and concise in your responses. - Can you create a summary that identifies the project, the recommendation and expected results in high level business and financial terms. Please explain how you arrived at these conclusion

    Merger & Acquisition: Team Assignment

    This is part of a team assignment. This will be a report to the board of directors that identifies a synergistic acquisition candidate for your company. An acquisition of UST by Altria. The 2006 annual report for both companies are attached. i. This report should clearly identify the following: 1) Your propose

    NPV, IRR, and Payback

    CU Boxes Inc. makes boxes for shoe manufacturers. One of the machines that CU uses may need replacement. The following information is available to you: Revenues will not change if the machine is replaced. Both the present machine and the new machine will last 5 years and will have no disposal value in five years. The new mac

    Error in Expected Present Value

    The followings are the forecasted financial information on ABC Company: Year : 0 / 1 / 2 / 3 / 4 to n Accounting profit (millions) : 0.9 / 0.9 / 0.9 / 0.9 / 0.96 Net cash flow (millions) : -5.8 / 0.7 / 2.1 / 3.8 / 0.58 Without doing any calculation, any mistakes(s) made in the following calculation: << The curren

    The Impact of Unethical Behavior & Sarbanes-Oxley Act

    If I wanted to provide and analysis in which you identify situations that might lead to unethical practices and behavior in accounting. How would i examine the impact of the Sarbanes-Oxley Act on financial statements.

    Cost Reallocation

    Based on the attached article I need help answering the following questions Describe the process of allocation of costs in this organization. Do you agree with the approach? Why or why not?. Identify those situations when common costs are allocated. Explain the impact of allocating common costs for internal decision m

    Finances Multiple Choice Questions & Problems

    Multiple Choice Questions: 1. Corporate managers are expected to make corporate decisions that are in the best interest of A) top corporate management. B) the corporation's board of directors. C) the corporation's shareholders. D) all corporate employees. 2. Financial markets are used for trading: A)

    Identifying synergistic acquisition candidate

    This will be a report to the board of directors that identifies a synergistic acquisition candidate for your company. i. This report should clearly identify the following: 1) Your proposed acquisition terms 2) Price 3) Financing 4) Potential negotiation strategies j. Supporting financial d

    Decisions Regarding Long-Term Financial 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

    Profitability Index/Mutually exclusive investments with unequal lives

    PROFITABILITY INDEX: Another project under consideration by Clayton Systems is the upgrading of its data processing operations. To change its operation will require a $1,500,000 investment and the new equipment will have a useful life of five years. The firm currently contracts out almost all of its data processing needs to an

    Stock Control and Cycle

    a) Using a spreadsheet where appropriate, draw a stock control system for the purchase of water features by Garden Force over a seven month period. You must assume 150 000 units are used every two months, a maximum stock level of 210 000 units, minimum stock level of 60 000 units. Stock is reordered when it reaches a level of 12

    arguments against the use of Flash animations

    1. High-end jewelry retailers such as Harry Winston and Tiffany often use Macromedia's Flash software to create their Websites. Present two (2) arguments for and two (2) arguments against the use of Flash animations in sites such as these. Consider the retailers' objectives, the characteristics of the products being sold, and

    35 Finance Multiple Choice Problems

    1. Financial leverage is beneficial only if the firm can employ the borrowed funds to earn a higher rate of return than the interest rate on the borrowed amount. Generally speaking, the higher the financial leverage, the greater the profits at high levels of operating profit. a) true b) false 2. How long must one wait (to t

    Capital Budgeting Integral Projections

    2. Capital Budgeting Mini-Case 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

    Finance Problems

    7) X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: Year Project A Project B 1 $12,000 $10,000 2 8,000 6,000 3 6,000 16,000 a) Which of the two projects should be chosen based on the payback method? b) Which of the two projects should b

    Present Value

    A father wants to buy his daughter a new car on her 18th birthday. His daughter just turned 13, and the father estimates the new car will cost $28,000 at the time of purchase. Rates on 5-year certificates of deposit are currently at 5%, with quarterly compounding. How much does the father need to deposit today to have $28K at

    Capital Budgeting IRR

    The company is considering investing in a machine costing $100,000. It has a 10 year life span, and no salvage value. Annual maintenance costs are $10,000pa, and labour savings are $25,000pa. Ignore tax effects. a. If all cash flows occur at the end of each year, what rate of return can be expected? b. If all cash flows o

    Finance - NPV & IRR

    Can you help me get started on this assignment? The chief financial manager of the Picayune Daily is trying to determine of the company should purchase a second printing press to increase circulation due to recent surge in population growth in the area. He works with the sales manager, and is provided to the following project

    Present Value problems

    Please show work and the calculation on the FVAIF: 40 yr old establishes a retirement account that is expected to earn 7% annually. Contributions will be $2,000 annually at the beginning of each yr. Initially, the saver expects to start drawing on the account at age 60. a) How much will be in the account when the saver is a

    MACRS 3-year class

    I am evaluating a proposed acquisition of a new computer for my company. The computer's price is $40,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firm's before-tax revenues by $20,000 per year but w

    Centralized and decentralized capital budgeting

    1. What is meant by the terms "centralized" and "decentralized" when applied to capital budgeting? Why might centralized and decentralized analyses of the same project lead to different net present values? What might lead companies in one country to have a lower cost of capital than similar companies in another?

    Bonds, zero coupons, financial analysis, & Net present value

    Net present value (NPV ) at 10%, the payback period, ARR, PI and IRR Problems: How to adjust for the different timing and risk of alternative investments. The net present value (NPV) of an investment is the difference between the present value of its benefits (inflows) and the present value of its costs (outflows). The att