Share
Explore BrainMass

Net Present Value (NPV)

Capital Budgeting problem

See the attachment. thanks ABC is considering purchasing the existing business of a competitor who produces Model X-Ray Superconductors. The life of this product is estimated to be 20-years, after which the assets will be sold. The details of the transaction are as follow: Total purchase price: Company's assets (e.g

Decision-making using Net present value analysis.

Sandy Rose was given two options for receiving her winnings, if she won, from the Reader's Digest sweepstakes. Option A is a payment of $1 million immediately, plus $137,932 per year for the next 29 years. Option B is an immediate payment of $167,000, plus additional payments of $167,000 per year for the next 29 years. Which

Brown Stone Corporation

I need help with the following... Brown Stone Corporation, maker of customized electric guitars is contemplating the investment of $1,000,000 in a new production facility. The economic life of the facility is estimated to be five years at which time the facility will be obsolete and have no salvage value. The firm will use

Finding the NPV of the Investment

The cost of investment $30,000 The estimated annual profit $5,000 for the first year The annual profit increases by 30% annually The useful life of the investment is 5 years The estimated cost of capital 10% Find the net present value of the investment.

Comparing Net Present Value

There are two mutually exclusive projects with the following net cash flows: Project A -200,000 1. 65,000 2. 60,000 3. 50,000 4. 65,000 5. 50,000 Project B -125,000 1.60,000 2.40,000 3.40,000 4.35,000 5.45,000 If the company's cost of capital is 12 percent, which project would you choose?

Steele Electronics: Economic Profit and NPV

Please use the attached spreadsheet Steele Electronics is considering an investment in a new component that requires a $100,000 investment in new capital equipment, as well as additional net working capital. The investment is expected to provide cash flows over the next five years. The anticipated earnings and project free ca

NPV question

See attached. Please show in Excel. Bauer Industries is an automobile manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following increm

Calculating NPV, optimal capital structure, WACC and Ke

1.Brown Corp is considering buying a new press with a total installed price of $2.2 million. The old press (which will be sold if new one is purchased) cost $2.1 million 10 years ago and can be sold for $1.0 million today. If the new press is purchased, Brown Corp expected sales to increase by $1.6 million each year for the next

PW at MARR

The management of your company is considering adding a SO2 scrubber unit to your present plant to remove SO2 from stack gases, and you have conceived four designs to accomplish this task. Management does not believe that cleaning the gas just to reduce air pollution is worthwhile unless the government forces this. However, mana

Net Cash Inflows

Practice Problem 36. Three potential investment projects (A, B, and C) at Nit Corporation all require the same initial investment, have the same useful life (3 years), and have no expected salvage value. Expected net cash inflows from these three projects each year is as follows: A B C Year 1 $1,000 $2,000 $3,000 Y

Internal Rate of Return and the Net Present Value

Scalia's Cleaning Service is investigating the purchase of an ultrasound machine for cleaning window blinds. The machine would cost $136,700, including invoice cost, freight, and training of employees to operate it. Scalia's has estimated that the new machine would increase the company's cash flows, net of expenses, by $25,000 p

Cash outlay, depreciation, cash flosw, NPV of project

See the attached file. - 10.) Mills Mining is considering the purchase of a new machine to expand its operatios. The total cost of the machine is $500,000. Mills Mining intends to use the following depreciation schedule. Year Depreciation rate 1 33% 2 45 3 15 4 7 - The companies will need to increase its invent

NPV Stated by Borrowers and Lenders

NOTE: Unless otherwise stated, the borrowers and lenders do sell at the same market interest rate. 1. Shareholders of corporations generally do not vote on every investment decision but depend on managers to maximize value by: (A) Choosing the highest net income projects. (B) Investing at the market rate of return. (C) Buy

NPV of the transaction

Mrs. Biggs invested in a business that will generate the following cash flows over a three-year period. Year 0 Year 1 Year 2 Taxable revenue 30,000 45,000 70,000 Deductible expense (15,000) (15,000) (20,000) Nondeductible expense(1,000) (4,000) (10,000) If Mrs. Biggs

Multiple Choice And Short Answer

Please see attached sheet for problems and instructions. Do not take if not willing to follow instructions. For the multiple choice/true false answers only submit the question number and answer -- do not include the question in your answer sheet. For other questions/problems, please show all of your work. One Excel attachm

Net present value of the project

A project will produce operating cash flows of $45,000 a year for four years. During the life of the project, inventory will be lowered by $30,000 and accounts receivable will increase by $15,000. Accounts payable will decrease by $10,000. The project requires the purchase of equipment at an initial cost of $120,000. The equipme

Quality Drycleaners: Annual Net Cash Flows and NPV

Quality Drycleaners would like to purchase a new machine for cleaning large quilts and comforters. The current cleaning operation on quilts and comforters is done by hand. The new machine would cost $12,500. The estimated service life is 12 years, at which time it is estimated that the machine could be sold for $500. The comp

Iverson Company: Straight-Line Depreciation

Iverson Company is considering the purchase of a new machine. It will cost $270,000, last for 8 years, and have a zero terminal salvage value at the end of that time. If purchased, the machine is expected to increase revenues by $250,000 per year, but additional cash outlays to operate the machine will equal $200,000 per year.

Comparing IRR and the NPV of Different Projects

Mr. CFO is evaluating 2 different projects. One requires an initial investment (cash outlay) of $200,000. Thereafter, it is expected to generate annual cash flows of $75,000/year for 6 years. The appropriate discount rate is 8%. Project B requires an initial investment of $1 million. Thereafter, it will produce annual cash

External Financing / Net Present Value of Project

Frisch Fish Corporation expects net income next year to be $600000. Inventory and accounts receivable will have to be increased by $300000 to accommodate this sales level. Frisch will pay dividends of $400000. How much external financing will Frisch Fish need assuming no organically generated increase in liabilities? Stone, I

Computing cash flow analysis with NPV

In the current year ( year 0), Amisha became a shareholder in Sultan Inc., a calendar year S corporation, by contributing $15,000 cash in exchange for stock. Shortly before the end of the year, Sultan's CFO notified Amisha that her pro rata share of ordinary loss for the year would be 55,000. Amisha immediately loaned $40,000 to

Titmar Motor Co: Calculate NPV and IRR

The TitMar Motor Company is considering the production of a new personal transportation vehicle that would be called the PTV. The PTV would compete directly with the innovative new Segway. The PTV will utilize a three wheel platform capable of carrying one rider for up to 6 hours per battery charge, thatnk to a new

Xia Corporation (NPV and total value of assets)

Can you help me get started with this assignment? Xia Corporation is a company whose sole assets are $100,000 in cash and three projects that it will undertake. The projects are risk-free and have the following cash flows: Project Cash Flow Today ($) Cash Flow in One Year ($) A -20,000 30,000 B -10,000 25,000 C -60,0

Potential Investment Projects

Can you help me get started with this assignment? Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project Cash Flow Today Cash Flow in One Year A -10 20 B 5 5 C 20 -10 Suppose all cash flows are certain and the risk-free interest rate is 10% a. Wh

Net Present Value

1.Calculate the NPV for each of the following investments. The opportunity cost of capital is 20% for all four investments. Investment Initial Cash Expenditures Year 1 Cash Flow A ($10,000) $18,000 B ($ 5.000) $ 9,000 C ($ 5,000) $ 5,700 D ($ 2,000) $ 4,000 A. What is the NPV o