Explore BrainMass

Explore BrainMass

    Capital Budgeting

    BrainMass Solutions Available for Instant Download

    Choosing Trucks by Comparing NPV and IRRs

    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

    Capital Budgeting

    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

    NPV , IRR

    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

    Capital Structure Analysis: Pfizer Pharmaceutical Information

    Using attached Pfizer Pharmaceutical information. Assume that the company will engage in a major capital acquisition program that is expected to improve EBIT by 10%. Do the following: 1) Calculate the EBIT/EPS for debt financing. Discuss the financial implications. Document the source of your information 2) Calculate the E

    Calculate and analyze the degree of operating leverage

    A project has a fixed cost of $1,000 per year, depreciation charges of $500 a year, revenue of $6,000 a year and variable costs equal to two-thirds of revenues. A. If sales increase by 5%, what will be the increase pretax profits B. What is the degree of operating leverage of this project C. Confirm that the percenta

    Calculate NPV and IRR

    Growth Enterprise believes its latest project, which will cost $80,000 to install, will generate a perpetual growing stream of cash flows. Cash flows at the end of this year will be $5,000 and cash flows in future years are expected to grow indefinitely at an annual rate of 5%. A. If the discount rate for this project is 10

    Capital Budget Analysis

    1. How would you define and quantify risk as used in capital budgeting analysis and what is the purpose of using sensitivity analysis?

    Cost of Capital

    Calculate the cost of capital (show calculations) for Pfizer using the following: A) Weighted Average cost of capital B) Capital -asset pricing model (beta)

    Capital outlay

    Large systems funding, generally associated with strategic information systems planning, usually requires funding with capital dollars. Who do you think should justify the capital outlay, the functional proponent(s) or the senior IT manager?

    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

    Tax Losses and Gains in Capital Budgeting

    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

    26 Practice Questions - Capital Structure

    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

    12-14 Pan American Bottling purchase of machine: NPV, IRR, accept the project?

    12/14. The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $45,000. The annual cash flows have the following projections: Year Cash Flow 1 . . . . . . . . . . $15,000 2 . . . . . . . . . . 20,000 3 . . . . . .

    Should the Pan American Bottling Company Purchase a New Machine?

    The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $45,000. The annual cash flows have the attached projections. Year Cash Flow 1 $15 000 2 20 000 3

    Risk and Decision Making

    1. If corporate managers are risk-averse, does this mean they will not take risks? Explain. 2. Explain how the concept of risk can be incorporated into the capital budgeting process. 3. If risk is to be analyzed in a qualitative way, place the following investment decisions in order from the lowest risk to the highest ri

    Accounting Rate of Return, Payback period, Internal Rate of Return

    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.

    Capital Budgeting Decisions - Chicago Valve Company

    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

    Capital Budgeting (h)

    "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

    Finance Questions

    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

    ADVERTISEMENT