Explore BrainMass

Capital Budgeting

Evaluate capital budgeting decision scenarios for Equity Corp.

Equity Corp. paid a consultant to study the desirability of installing some new equipment. The consultant recently submitted the following analysis. Cost of new machine $100,000 Present value of after-tax revenues from operation 90,000 Present value of after-ta

NPV, Project Analysis, WACC

Directions: Answer the following five questions on a separate document. 1. Which of the following statements is CORRECT? a. An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations. If the project would have a favorable effect on other operations, then

BA 341 week 8

The internal rate of return is: Answer the discount rate that makes the NPV positive. the discount rate that equates the present value of the cash inflows with the present value of the cash outflows. the discount rate that makes NPV negative. the rate of return that makes the NPV positive. One disadvantage of the

Corporate Finance TF: Diversification, CAPM, NPV, IRR, MIRR, Risk, WACC, equity

True/False questions: T F 1. Diversification eliminates unsystematic risk. (According to portfolio the theory and CAPM.) T F 2. With as little as 10 or less securities, we can eliminate a significant portion of diversifiable risk or unsystematic risk. (According to portfolio the theory and CAPM.) T F 3. The greater th

Solution for Multiple choice questions/problems for Corporate Finance

Multiple choice questions/problems: 36. Increasing the Debt/Equity ratio as one moves towards the optimal capital structure results in: a. An increase in the degree of operating leverage b. An increase in the cost of equity and debt c. A decrease in the weighted average cost of capital d. Both a. and b. e. Bo


Strongbad Boxing Inc. has the following unit sales of boxing gloves for the year 2002: 1st quarter 50,000, 2nd quarter 45,000, 3rd quarter 60,000, and 4th quarter 40,000. The selling price per unit (a pair) is $50. Credit sales are 30% of total sales. Desired ending inventory is 20% of next quarters expected sales. The fou

Corporate Finance: NPV

11-1 NPV Project K costs 52,125, its expected net cash inflows are 12,000 per year for 8 years, and its WACC is 12% What is the projects NPV? 11-2 IRR Refer to problem 11-1 What is the IRR? 11-4 Payback period: Refer to problem 11-1. What is the MIRR? 11-7 CAPITAL BUDGETING CRITERIA. A firm with 14% WACC is eva

Corporate Finance-please resolve and show how answers are retrieved

Show your work and/or provide supporting detail for short-answer problems. Question 1 1. Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? Answer a. The projects regular payback increases as the WACC declines. b. The projects NPV increases as the W

Cost of capital

1. Bankston Corporation forecasts that if all of its existing financial policies are followed, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankston would like to avoid issuing new stock. Which of the following actions woul

Finance: Calculate IRR, NPV, Cost of Capital

Please help me with a Finance assignment by answering the following questions: 1. You purchase machinery for $23,958 that generates cash flow of $6,000 for five years. What is the internal rate of return on the investment? Chapter 22: Capital Budgeting 429 2. The cost of capital for a firm is 10 percent. The firm has two

Finance: systematic risk in a portfolio, expected return for the asset etc

41. Which of the following is the best measure of the systematic risk in a portfolio? a. variance b. standard deviation c. covariance d. beta 42. The expected return for the asset shown in the following table is 18.75 percent. If the return distribution for the asset is described as below, what is the standard devi

Capital Budgeting Decision

For this problem look on the bottom part of the problem which is item number 1 asking for Annual Cash Flow, Payback period, annual rate of return, net present value and Internal Rate of Return - That's all I need. Also, I attache an excel table to help to calculate it. Clark Paints: The production department has been invest

Profitability Index versus NPV and Comparing Investment Criteria

1. Profitability Index versus NPV Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects for

Kudler Opening Budget: Making a Budget

The business is a doggy day care that boards dogs and trains them. Please help making a budget for this assignment. Resources: Kudler Opening Budget Illustrate how your venture would perform by estimating the revenue and expense to calculate operating profit or loss. Include estimates of your venture's main sources of re

Global Financial Management

When expanding and investing in projects overseas as my company (BELL TECH, USA) has planned to, it is very important to understand such things as return on equity (ROE) and internal rate of return (IRR). I need you to help me (you can use the websites listed below and other internet resources) gather information on ROE and


A hospital is considering the purchase of new equipment. - Machine A and Machine B. Machine A has a cost of $100000 and has an expected economic life of five years, after which it has a scrap value: $ 25000. The after taz profits or losses for the next five years are ($10,200), $10000, $30000, $20000 and $15000. Machine

Capital Budgeting Decision

Tawanna is considering starting a small business. She plans to purchase equipment costing $145,000. Rent on the building used by the business will be $24,000 per year while other operating costs will total $30,000 per year. A market research specialist estimates that Tawanna's annual sales from the business will amount to $90,00

Nadler-Tushman Congruence Industrial Services of America

BACKGROUND Each of the diagnostic models presented in Module One had particular strengths and weaknesses. The Nadler-Tushman Congruence Model is particularly strong in terms of Inputs. Therefore, for this part of the case, you are to analyze the Key Inputs of Industrial Services of America, Inc. From the reading you wil

Procedures to establish a not for profit organization

You have been asked by a group of local citizens to assist in establishing a not-for-profit organization for the purpose of raising funds to keep their neighborhood safe and clean. These people are concerned about the growing crime rate and increased amount of trash and traffic in their community. They believe that a collabora

Accounting and finance

2. If you invest $10,000 today at 3 percent compounded monthly, how much will you have after 10 years? 3. How much would you have to invest today in order to receive $10,000 in 5 years at an assumed 5% APR and quarterly compounding? 4. What is the present value of $10,

The Budgeting Process at Springfield: Change cost measurement for failed budget

Springfield Corporation operates on a calendar-year basis. It begins the annual budgeting process in late August, when the president establishes targets for the total dollar sales and the net income before taxes for the next year. The sales target is given to the Marketing Department, where the marketing manager formulates a sa

Finance: Benson Designs' project; Rank Caradine Corp project's proposed risk

P2. Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $18,250, and the project is expected to yield after-tax cash inflows of $4,000 per year for 7 years. The firm has a 10% cost of capital. a. Determine the net present value (NPV) for the project. b. De

Quantitative and Data Management

Can you help me with this assignment? 1) A three-year extended warranty is available for a new vehicle you are purchasing. After researching your make/model, you find that you can expect no significant repair costs in the first two years but repair costs of $1,600 in year three. You could purchase the extended warranty toda

Finance: Project's forecasted NPV; IRR vs NPV; Payback period

See attached file for tables. 1) Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project took place, the Federal Reserve changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By ho

Capital Budgeting Theory on Purchase of New Apple Press

Capital Budgeting Methods Managers make some of the most important decisions during the capital budgeting process. During this process, it is crucial that management use accurate methods to maximize the resources of the organization. Using data from the Anthony's Orchards website, draft a memo to the chief financial office