Explore BrainMass

Net Present Value (NPV)

Kinsgsley Products Ltd - Alternative company choice

Kinsgsley Products Ltd, is using a model 400 shaping machine to make one of its products. The company is expecting to have a large increase in demand for the product and is anxious to expand its productive capacity. Two possibilities are under consideration: Alternative 1: Purchase another model 400 shaping machine to operate

Net Present Value

We are developing a new software system for one of our clients. The system has an up-front cost of $75 million (at t = 0). We have forecasted their inventory levels for the next five years as shown below: Year Inventory 1 $1.0 billion 2 1.2 billion 3 1.6 billion 4 2.0 billion 5 2.2 billion We forecast that its new s

Net Present Value using MACRS Depreciation method

Company A is considering a major expansion of its business. The details of the proposed expansion project are summarized below: ? The company will have to purchase $500,000 in equipment at t = 0. This is the depreciable cost. ? The project has an economic life of four years. ? The cost can be depreciated on a MACRS 3-ye

NPV of a project

Can you help me with this assignment? Returns on the market and Company Y's stock during the last 3 years are shown below: Year Market Company Y 2002 -24% -22% 2003 10 13 2004

Calculating NPV

Overview of Big Crick River Site The proposed Big Crick River site is located .23 miles due west of the intersection of Bronco Road and Route 180 in the southwest corner of Johnson County. The Big Crick River is a strong-flowing, medium-sized river that is approximately a quarter-mile wide at the proposed project site. At this

NPV of cash flows

The State Power and Electricity Commission has branch offices in two country towns, Rundown and Brokendown. As well as providing customer account payment services, the offices also serve as bases for technicians who do repair and maintenance work on power lines and equipment in the area. The Commission is considering closin

Australian manufacturing company present value of quality control system

An Australian manufacturing company with all shareholders located in the Ivory Coast, a country located off the mainland of Africa. The financial manager is currently in the process of evaluating two types of quality control systems for installation in the company's manufacturing plant. The company is all equity financed, wi

Payback Method and Net Present Value Method

Dino Corporation is trying to decide which of five investment opportunities it should undertake. The company's cost of capital is 16%. Owing to a cash shortage, the company has a policy that it will not undertake any investment unless it has a payback period of less than three years. The company is unwilling to undertake more th

Efficiency of a System & Equipment Purchase

* The Academic Computing Center has five trainers available in its computer labs to provide training sessions to students. Assume that the capacity of the system is 1900 students per semester and the utilization is 90%. If the number of students who actually got their orientation session is 1500, what is the efficiency of the

Business Finance Applications

(See attached file for full problem description) --- 7.3 The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. Cash flows are in $ thousands and the corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and i

DCF methods for evaluating investments

"It is impossible to use DCF methods for evaluating investments in research and development. There are no cost savings to measure, and we don't even know what products might come out of our R&D activities." This is a quote from an R&D manager who was asked to justify investment in a major research project based on its expect

Breakeven Point, Discount Rate, DRIP, and Market Portfolio

Need help with the following questions: 1. Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $400,000, but 20 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $3.6

Working Capital & Ratios, NPV & Sales

See attached file for full problem description. 1. Suppose sales were $38,873, $45,626, and $57,689 for the years 2000, 2001, and 2002, respectively. Compute the annual growth rate in sales for 2001 and 2002. Compute the arithmetic average growth rate based on the annual growth rate calculations. Using the arithmetic average

Net present value: Software Systems

(See attached file for full problem description) Determined Net Present Value with 0% discount rate, 10% discount rate, 20% discount rate and so forth. Draw a Net Present Value profile for the investment.

Rucci Inc. 7 years

Rucci Inc. is considering a project that would require an initial investment of $462,000 and would have a useful life of 7 years. The annual cash receipts would be $300,000 and the annual cash expenses would be $120,000. The salvage value of the assets used in the project would be $69,000. The company's tax rate is 30%. For tax

Finance Questions: Capital Budgeting

1. Your firm and a possible project have the following cash flows: Company Project Economy good bad good bad Year 0 -200 -200 -50 -50 Year 1 100 50 20 60 Year 2 120 60 30 50 Year 3 110 55 40 90 Year 4 90 45 35 70 Given 8% discount rate, a 60% chance of a good economy over the next 4 years

4 Finance Questions

1) Mesmer Analytic, a biotechnology firm, floated an initial public offering of 2,000,000 shares at a price of $5.00 per share. The firm's owner/managers held 60 percent of the company's $1.00 par value authorized and issued stock following the public offering. One month after the IPO, the firm's board of directors declared a on

Pay Back Period

Your CEO insists that all projects should have a payback period of four years or less. As a result, attractive long-lived projects are being turned down. The CEO is willing to switch to a discounted payback with the same four-year cut-off period. Would this be an improvement? Please prepare a 5 to 6 page discussion paper det

A capital budgeting model

A company has six different opportunities to invest money. Each opportunity requires a certain investment over a period of 6 years or less. The company wants to invest in those opportunities that maximize the combined Net Present Value. It also has an investment budget that needs to be met for each year. We assume that it is po

Question about Sensitivity analysis

Conduct a sensitivity analysis on the following "what if" scenarios: a. What happens if the country you have chosen has provided incentives to invest? Now that your company has started to become profitable, the country is taking the incentives back. How do you determine the residual value at the end of the project life?

Financial Analysis

How large are the monthly payments of a recent, college graduate with $35,000 in student loans, if the payments are to be made for 10 years and the annual interest rate on the loans is 6.0%? What amount would you accumulate if you paid $500 at the end of every quarter for 25 years, earning an annual percentage rate of 8%

Important Information about Corporate Finance Questions

1. Allegan Manufacturing Company manufactures one product, which it sells for $200 per unit. Total dollar sales are $10 million and variable costs are $75 per unit. The company's fixed cost is $3 million. What is the firm's breakeven output? 2. Assume that you purchased a 7-year, 8 percent savings certificate for

MBA - Financial Management (Discounted Cash Flow Analysis

Help with financial Management Problem:- Schmidt A.G. is considering the replacement of three hand loaded block milling machines with an automatic milling machine. The three hand -loaded machine are only three years old and were purchased at a total cost of DM300,000. The useful life of the machines at the time of their purch

Description of Net Present Value Analysis

I need help with this problem. I am assuming I need to evaluate the IRR in order to make a determination on which method to choose based on NPV analysis. How would I do this in an Excel spreadsheet? Additionally, based on NPV analysis why is one method more preferable than the other? Dixie Dynamite Company is evaluating two m

Finance Problems

You invest a single amount of $12,000 for 5 years at 10 percent. At the end of 5 years you take the proceeds and invest them for 12 years at 15 percent. How much will you have after 17 years? Mr. Flint retired as President of the Color Tile Company but is currently on a consulting contract for $45,000 per year for the