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Net Present Value (NPV)

Sources of financing new business projects

(i) Other than the net present value (NPV)give an analysis of other matters to be considered in decision process. ie. IRR, PAYBACK and analyse these options in detail. (ii) Evaluate appropriate sources of finance that could be used to fund the setting up a new factory for a privately family owned company. (The company produ

Net Present Value - Sleep-Easily Ltd

Net Present Value - See the attached file. Sleep-Easily Ltd manufactures high quality, branded orthopaedic furniture in Manchester. The products are made in limited numbers and for limited production periods of usually no more than six years. All products are sold on the Web, supported by speciality magazine advertising. A s

After tax cash flow, NPV of projects

#1 The Acme Manufacturing has a project involving the purchase of equipment for $35,000 that will increase sales of Acme Manufacturing by $ 14,500 per year. The annual running costs of this equipment for the first 3 years are $ 1,000, $ 2,000, and $ 4,000 respectively. It will increase by $ 3,500 every year from then on. The e


Problem #3 (26.) Abandonment Option. Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 50,000 units a year at a price of $60 each. If the new product is a bust, only 30,000 units can be sold at a price of $55. The variable cost of each ba

Pappy's Potato: Calculating Project Cash Flows and NPV for your portfolio

Calculating Project Cash Flows and NPV - See attached file. If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio's expected return? The variance? The standard deviation? b. If the expected T-bill rate is 4.25 percent, what is the expected risk premium on the portfolio? c. I

Certainty equivalent net present value: Accept - reject decision

1. Certainty equivalents - Accept - reject decision Pleasantville ball valve has constructed a table, shown below, that gives expected cash inflows and certainty equivalent factors for these cash inflows. These measures are for a new machine with a five-year life that requires an initial investment of $95,000. The fir

Calculation of the NPV (net present value) of alternative manufacturing options.

A manager must decide how many machines of a certain type to buy. The machines will be used to manufacture a new gear for which there is increased demand. The manager has narrowed the decision to two alternatives: buy one machine or buy two. If only one machine is purchased and demand is more than it can handle, a second machine


Cusic Cordwood Co. has a project available that will provide aftertax cash flows of $185,000 for the next 6 years. The project has more risk than the company, so the president has told you to use an adjustment factor of plus 2 (+2) percent in your calculations. The company uses 65% equity and 35% debt in its capital structure

Finance: Optimal replacement cycle for machinery and when it should be replaced.

Gillian is deciding whether to replace an old machine, and has assembled some information (refer to attachment File #1). She believes that the second-hand market value of either machine will decline over time in line with the depreciation schedule (eg. the old machine should sell for $3,000 today). If there are no taxes, and Gil