A quaint but well-established coffee shop, the Hot New Café, wants to build a new café for increased capacity. It's expected sales are $800,000 for the first 5 years. Direct costs including labor and materials will be 50% of sales. Indirect costs are estimated at $100,000 a year. The cost of the building for the new cafe will
It appears that NPV or net present value is the best method because it takes into account the initial financial outlay, and brings the future projections back to the present day's value to figure out which is worth pursuing in the long run. Entrepreneurs take many risks, but of course, most wish to take the most calculated risks
I have a few problems to work on for my practice class. Please show me your steps to the solution/formulas use. Thank you. Problem #1 The market value of Charcoal Corporation's common stock is 20 million, and the market value of its risk-free debt is $5 million. The beta of the company's common stock is 1.25, and the
Not sure which method to use to work out the following problem: Nano, Inc. is preparing its budget for the second quarter. The following sales data have been forecasted: April May June July August Unit Sales ............ 640 720 780 620 680 Additional Info
1. Prefer a centralized or decentralized approach to budgeting, why? 2. What is meant by bottom-up or top-down with regard to budgeting?
I need help getting started with the following: The management at William's Pharmaceutical is considering new computers and equipment to manage inventory and to expedite online orders and product shipment. The investment will be $100,000 and the cost of capital is 15%. The company earned $500,000 in sales last year and antici
Please write your answers on a WORD or PDF. 1) Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 percent and the project is expected to have an initial after tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500
Projected cash flows for the proposed Solar Energy ("SE") Project, with a four-year life, are: 1. Initial expenditure of $100,000 now. 2. Projected cash inflow of $40,000 at end-of-each-of-next-three-years. 3. Projected cash inflow of $140,000 at end-of-fourth-year. Key inputs for three of the different capital
The management of Better Plastics has recently been looking at a proposal to purchase a new plastic-injection-style molding machine. With the new machine, the company would not have to buy small plastic parts to use in production. The estimated useful life of the machine is 15 years, and the purchase price, including all setup c
What are the four major budgets of a health care organization? Briefly discuss each.
Fiera Corporation is evaluating a new project that cost $45,000. The project will be financed using 40% debt and 60% equity, thus maintaining the firm's current debt-to-equity ratio. The firm's stockholders have a required rate of return of 18.36%, and it bold holders expect a 10.68% rate of return. The project is expected to ge
Please find attached questions and also corresponding excel formula shells to match the answers to. Thanks
NPV for investment decisions The head of the Oncology department of FH Research Center is considering the purchase of some new equipment. The cost is $420,000, the economic life is 5 years, and there is no terminal disposal value. Annual cash inflows from operations would increase by $140,000 and the required rate of return i
Ch 10: Waldo County. Evaluation of $90 Million Outlet Mall to Intercept Tourists Heading Towards Maine
Directions: Read the information given in the Waldo County mini-case at the end of Chapter 10 in the text (pages 266-267). Use that information to do all parts of the following. Your work should be typed in a Word document, with all necessary calculations done using an Excel spreadsheet. Part 1: Use Excel to analyze the n
When using the IRR approach, when can the internal rate of return be determined simply by dividing the initial outlay by the cash flows? Will a decision that is based on NPV ever change if it were based on IRR instead? Why or why not?
1.1 Discuss 12 principles of foundational corporate finance. 1.2 Compare and contrast accounting net income and cash flows. 1.3 Compare and contrast the market value of an asset or liability from the book value. Question: With respect to those projects with higher individual IRR's, how does this impact the outcome of th
COMPREHENSIVE CAPITAL BUDGETING BALANCE SHEET Cash 2,000,000 Accounts Payable and Accruals 18,000,000 Accounts Receivable 28,000,000 Notes Payable 40,000,000 Inventories 42,000,000 Long-Term Debt 60,000,000 Preferred Stock 10,000,000 Net Fixed Assets 133,000,000 Common Equity 77,000,000 Total Assets 205,000,0
Problem 10-32 Finding unknowns Consider the following data: Division J K L Income $280,000 $ $ Revenue $ $ $ Invested Capital $ $3,000,000 $ 16,000,000 Return on sales 7% 4% % Capital turnover 4 3 Rate of return on invested capital % 20% 15% Cost of capital 16% 12%
You are put in charge of replacing the fleet of sales and executive automobiles for your company. Three types of cars have been identified. The first type would cost less upfront, have higher maintenance cost, and lower salvage values after shorter lives. The second type would cost a little more upfront, have slightly lower main
Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the project's ability to earn the company additional compensation. The 3 main tools used to make this evaluation are the pay-back period, net present value (NPV), and internal rate of return (IRR). Ye
Three Rivers Company runs clothing stores in the Pittsburg area. Three Rivers' management estimates that if it invests $250,000 in a new computer system, it can save $75,000 in annual cash operating costs. The system has an expected useful life of ten years and no terminal Disposal value. The required rate of return is 8%. Ignor
Three Rivers Company runs clothing stores in the Pittsburg area. Three Rivers' management estimates that if it invests $250,000 in a new computer system, it can save $75,000 in annual cash operating costs. The system has an expected useful life of ten years and no terminal Disposal value. The required rate of return is 8%. Igno
What is the IRR (internal rate of return) of the after tax cash flows for each company? What does comparison of the IRR's suggest is the effective corporate tax rate?
A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,000 per year for 5 years. Company (A) has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company (B) pays corporate taxes at a rate of 35% and can depreciate the investment f
Purpose of the project: In this project, you are supposed to be a financial manager who determines the cost of debt, cost of preferred stock, cost of common equity, capital structure, and the weighted average cost of capital (WACC) for a Phizer (PFE). You will use the estimated WACC as the discount rate to conduct capital budge
Study the information below and answer the following questions: 1.1.1 Calculate the payback period for project B (answers expressed in years, months and days). (3) 1.1.2 Calculate the accounting rate of return (on average investment) for each project. (4) 1.1.3 Calculate the net present value for each project. (6) 1.1.4 Ba
ALLIED FOOD PRODUCTS: Capital Budgeting and Cash Flow Estimation After seeing Snapple's success with non-cola soft drinks and learning of Coke's and Pepsi's interest, Allied Food Products has decided to consider an expansion of its own in the fruit juice business. The product being considered is fresh lemon juice. Assume t
Budgets are plans of action based on forecasted transactions, activities, and events that are synonymous with managing an organization. They are essential to accomplishing the goals articulated in an organization's strategic plan and are used to communicate information, coordinate activities and resource usage, motivate employee
Look at the net present value (NPV) equation (11-1) in your text Fundamentals of Financial Management and the cash flow time line below the formula. In your own words, explain each term of the NPV equation. Explain how you would arrive at the discounted cash flows for each year represented within the time line. How does this cal
NPV or IRR investment decision process, why include manager intuition? $1 Million NPV project, what does this mean? For what kinds of investments would terminal value account for a substantial fraction of the total project NPV, and for what kinds of investments would terminal value be relatively unimportant? Suppose an
How is capital budgeting used in an organization? What are the considerations that need to be analyzed when setting up a proposed budget?