Explore BrainMass

Explore BrainMass

    Net Present Value (NPV)

    Case Study and Analysis

    I need help with the following, using the case attached. The spreadsheet can be found using the link below. 1. Read Case 18: Portland Cancer Center on page 135 in the Cases in Healthcare Finance text. 2. Assume that you have been hired as a consultant to recommend a course of action for the Gamma Knife acquisition. Prepare

    Calculating NPVs and IRRs of Given Projects

    Suppose we have two mutually exclusive land development projects. The first is a office building which can be constructed for an initial outlay of $20 million and sold a year later for $24 million. The other use of the land is for a parking lot where an initial outlay of $10,000 will produce a cash inflow of $10,000 per year for

    What is the time value of money?

    What is the time value of money? How do net present value (NPV) and future value (FV) impact the concept of time value of money?

    Negative NPV project

    In a capital budgeting decision if a firm uses the net present value method and a 12% discount rate what does a negative net present value indicate: a. the proposals rate of return exceeds 12% b. the proposals rate of return is less then the minimum rate required c. the proposal earns a rate of return between 10-12% d. non

    NPV Calculations for Expanding Company.

    I need help calculating the attached spreadsheet, If I subtract the metrics in red from the metrics in black how will this calucate the required values for the PV and NPV? I know the PV is the present value factor, but how do I find the PV cash flows to calculate the NPV? A firm is going to expand into 5 domestic markets (Chic

    NPV Analyses

    Based on the following data/assumptions: Refurbishment an Existing Boat 1. Useful life 20 years 2. Rehabilitation costs $115,000 3. Estimated value of existing new spare parts that could be used to offset the rehabilitation costs $43,500 4. Dismantling and scrapping of old parts offset by salvage 5. Straight-line deprec

    Net Present Value vs. IRR

    Explain the Net Present Value (NPR) concept. What values must the NPR take on for the project to be acceptable at the promise of a return greater than the required rate of return? Contrast this method to Internal Rate of Return.

    John Doe has recently been appointed as Chief Risk Officer for Tutale(pty) Ltd

    1. John Doe has recently been appointed as Chief Risk Officer for Tutale(pty) Ltd, however, John realised that the company rely heavily on fixed-interest bearing debt for financing, moreover,the rare earth stone business may not be sustainable in the long run.Kindly advice John on what to advice management on the financial and b

    Capital Budgeting : NPV Method

    Problem 1 The president of E-Games, an online gaming company, is considering the purchase of some equipment used for the development of new games. The cost is $400,000, the economic life and the recovery period are both 5 years, and there is no terminal disposal value. Annual pretax cash inflows from operations would increase

    NPV and Break-Even Point

    Ben's is a sit-down restaurant that specializes in home-cooked meals. Melissa's is a walk-in deli that specializes in specialty soups and sandwiches. Both firms are currently considering expanding their operations during the summer months by offering pre-wrapped donuts, sandwiches, and wraps at a local beach. Ben's currently has

    A manufacturing company is thinking of launching a new product

    A manufacturing company 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 45% of sales. Indirect incremental costs are estimated at $95,000 a year. The project requires a new pla

    Time Value of Money for Savings for a College Fund

    Suppose that a young couple just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs, average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year

    Making Investment Decisions with the Net Present Value Rule

    The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The cane manufacturing machine will result in sales of 2,000 ca

    Beacon Company and Quillen Company

    Beacon Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $400,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,000. Project B will cost $280,000 , has an expected useful life of 10 years, a

    Sundae Corporation

    Sundae Corporation is considering the replacement of an existing machine.  The new machine would provide better sundaes, but it costs $120,000.  The X-tender requires $20,000 in setup costs that are expensed immediately and $20,000 in additional working capital. The X-tender's useful life is 10 years, after which it can be

    Compute Net Present Value

    Sealand Corporation is considering acquiring a newer, more modern machine. The machine, which requires an initial outlay of $3 million, will generate cash flows of $1 million at the MIDDLE of each year for 5 years. Investors could earn 10% elsewhere in opportunities of equal risk. Compute the net present value and explain what i

    ABC Company is considering the purchase of a new machine for $76,000.

    ABC Company is considering the purchase of a new machine for $76,000. The machine would generate a net cash inflow of $23,214 per year for 5 years. At the end of 5 years, the machine would have no salvage value. The company's cost of capital is 12 percent. The company uses straight-line depreciations. The present value factors o

    Discounted Cash Flow NPV assumptions on return and inflation

    1. A big challenge with the NPV is the assumptions on the return and inflation. This is less of an issue if we are buying a $100,000 machine with a 5 year life. Real estate however is a long term investment. - How do you estimate inflation over 5 years, 10 years and up to 30 years? - Nobody has a crystal ball and if you esti

    NPV analysis of Jameson Cargile, Inc.

    Jameson Cargile, Inc. is looking at two new bulldozers with similar investment amounts and has peformed an NPV analysis showing that the YellowJacket has an NPV over the 8 year life of -$6,352,229 while the Bumblebee shows an NPV of -$4,620,640. What could be said about the above situation? A. Both bulldozers are acceptabl

    Questions for Accounting for business

    1. How full costing is applied and used by managers to make good business decisions? 2. How are standards determined? Also, how are they used to manage resources? 3. What benefits could be realized by implementing decentralized budgeting and defend with examples? 4. What are two critical requirements for accurate capit

    Capital Budgeting

    Break-even cash inflows and risk Pueblo Enterprises is considering investing in either of two mutually exclusive projects, X and Y. Project X requires an initial investment of $30,000; project Y requires $40,000. Each project's cash inflows are 5-year annuities: Project X's inflows are $10,000 per year; project Y's are $15,000.

    Valuation of Facebook Requirements

    Valuation of Facebook This question requires you, among other things, to calculate the stock price for Facebook, and provide the needed analysis as asked in what follows. You will need to use "Sources of Financial Data" to obtain the necessary financial info/statements for Facebook, Inc., identify its peer companies and obtai

    Initial Outlay

    The Salida Salt Company is considering making a bid to supply the highway department with rock salt to drop on roads in the country during the winter. Management believes that the actual quantity will average 25,000 tons per year. The firm will need an initial $1,500,000 investment in processing equipment to get the project star

    Review questions

    Pretend that this restaurant Subway at a shopping mall is an indoor location has been open for 12 months and that business is slow and stockholders are putting pressure on us to do better. True or False? Please see attachment.

    Unequal lives of planes

    Shao Airlines is considering two alternative planes. Plane A has an expected life of 5 years, will cost $100 million, and will produce net cash flows of $30 million per year. Plane B has a life of 10 years, will cost $132 million, and will produce net cash flows of $25 million per year. Shao plans to serve the route for 10 years

    Simulation Analysis

    You have estimated the expected NPV from a project to be $3 million with a standard deviation of $4 million. The distribution of the possible NPV is approximately normal. If you are willing to accept a 25 percent chance of incurring a negative NPV on the project, should it be undertaken?