General Auto (GA) Corporation is developing a new model of a compact hybrid car. This car is assumed to generate sales for the next five years. GA has gathered information about the following quantities through focus groups with the marketing and engineering departments. Fixed cost of developing the car. This cost is assume
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
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
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
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.
A company 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 75,000 and the company WACC is 10 percent. What is the project's simple, regular payback?
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?
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
Please used the attached file A number of industrial products include gold and silver as a component since they have very good conductive properties. The S&M Smelting Company engages in the recovery of gold from such products and is considering a contract to begin extracting the gold from the recycling of personal computer
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
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
Murdock paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with the project. These estimates are shown in the following table.
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
Using a 14% cost of capital, calculate the net present value for each of the independent projects shown in the table and indicate whether each is acceptable. Project A Project B Initial investment $26,000 $500,000 Year Cash Inflows 1
25. Project Evaluation. The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $25. Year Unit Sales 1 22,000 2 30,000 3 14,000 4 5,000 Thereafter 0 It is expected that net working c
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
Practice Problem 37. (Ignore income taxes in this problem.) Nevland Corporation is considering the purchase of a machine that would cost $130,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost
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
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
Suppose that you do use your own views about exchange rates when valuing an overseas investment proposal. Specifically, suppose that you believe that the leo will depreciate by 2 percent per year. Recalculate the NPV of KW's 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
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
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
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
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
Net Present Value Decisions in the Service Industry A telecommunications company with a discount rate of 8% is considering two investments. Voice Service Data Service Initial cost $(50,000) $(100,000)
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
The cash flows from two capital expenditure projects are shown below. The discount rate is 10%. Project A Project B Initial cost $(10,000) $(10,000) Year 1 6,000 2,000 Year 2 5,000 4,000 Year 3 1,000 8,000 Year 4 0 16,000
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.
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