You have been asked by the President of your company to evaluate the proposed acquisition of a new spectrometer for the firmâ??s R&D department. The equipmentâ??s base price is $75,000 and it would cost another $15,000 to install it. The spectrometer falls under 3-year MACRS schedule and will be sold after 3 years for $30,000. Use of the equipment will require an increase in net working capital of $4,000 in year 0. The net working capital will be fully recovered or returned when the project is terminated at the end of year 3. The project is expected to generated Earnings Before Taxes and Depreciation (EBTD) of $25,000 per year. Assume the firmâ??s tax rate is 40%.{Note 3-year MACRS tax rates are =.33; .45; .15 and .07 percent in years 1-4; you may recall that due to half-year convention 3-year rule leads to depreciation for 4 years)

Solution provides standard capital budgeting method to determine whether a proposed acquisition should be accepted. Half-year convention 3-year MACRS depreciation is also discussed.

A project has annual cash flows of $7500 for the next 10 years and then $10,000 each year for the following 10 years. The IRR of this 20-years project is 10.98%. if the firm's WACC is 9%, what is the project's NPV?

What is the rate of return on an investment of $16,278 if the company expects to receive $3,000 per year for the next 10 years _______
18 percent, 13 percent, 8 percent, or 3 percent
I believe the answer isn't given - please advise answer & show work - thanks!!!

Finding NPV and IRR
Kennesaw Instrument Company is looking at six projects
with the following cash flows (investment outlays are negative cash flows):
The cost of capital for all of the projects is 11%
A) Calculate the Payback period for the six projects (round off to clos

Cost of capital is 12%. Its expects aftertax cash flows (including the tax shield from depreciation) for the next 5 years are:
Year 1 $ 10,000
Year 2 20,000
Year 3 30,000
Year 4 20,000
Year 5 5,000
a) Calculated the NPV.
b) calculate the IRR
c) Would you accept the project?

Project A has a WACC of 10% and the following cash flows:
Project A
Year Cash Flow
0 -$300
1 100
2 150
3 200
4 50
2. What is Project A's NPV?
a. $ 21.32
b. $ 66.26
c. $ 83.00
d. $ 99.29
e. $112.31
3. What is Project A's IRR?
a. 13.44%
b

A project is expected to generate cash flows of $14,000 annually for five years plus an additional $27,000 in year 6. The cost of capital is 10%.
a. What is the most that you can invest in this project at time 0 and still have a positive NPV?
b. What is the most that you can invest in this project at time 0 if you wan

The Leo Lip Company is considering opening a new store location that would be available for seven years until the lease expired. The project would require fixtures and equipment costing $276,000. The equipment has a 7 year useful life and estimated salvage value of 0. The equipment is considered 5 year class property of MACRS. T

) Threadnot, Inc.'s President wants to see the NPV and IRR of each of the above plans. The appropriate discount rate is 20%. Calculate each plan's NPV and IRR.
Year 0 1 2 3
Plan a $-8000 $8,000 $700 $700
plan b $-8000 $900 $900 $10000

NPV/IRR. Growth Enterprises believes its latest project, which will cost $80,000 to install, will
generate a perpetual growing stream of cash ﬂows. Cash ﬂow at the end of this year will be
$5,000, and cash ﬂows in future years are expected to grow indeﬁnitely at an annual rate of 5
percent.
a. If

XYZ is evaluating two mutually exclusive projects with the following net cash flows:
Project A
0 years=-$2000
1 year =$300
2 year=$500
3 year=$800
4 year=$1200
Project B
0 years=-$2000
1 year =$1000
2 year=$800
3 year=$500
4 year=$200
1) XYZ's WACC is 10.3% and both projects have the same risk as the firms