The Baldwin Company_Data

Questtion in the attached

Question TwoYou are evaluating two possible projects for your company, both of which involve the development of a new kind of computer mouse. The projects are mutually exclusive, meaning that the company can invest in only one of them. Both projects require an initial investment of $32 million to be made in each of the next three years. Sales and profits will begin in the 4th year, and this is where the two projects differ. Version A, which is more innovative, is expected to have sales in year 4 of $24 million and cash profits of $7.8 million. Profits are expected to increase 6% annually. Version B, which is less innovative but cheaper to produce, is expected to have the same sales in year 4, but profits of $8.9 million. Profits for version B are expected to increase only 4% annually. Assume for simplicity that all cashflows occur at the end of the year. The cost of capital for both projects is 12%.a) Which is the better project? How much is each project worth? b) You have the…

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Set up the cash flow for this. Calculate the net present value

Question 1 Assuming that you have beeh appointed finance director of BPX Bhd. The company is considering investing in the production of an electronic device used in automobile. There are two mutually exclusive projects available to achieve the plan. Project I Return in one year (RM) 60,000 60,000 Project II State of economy Probability Good 0.3 58,000 62,000 Moderate 0.5 Poor 0.2 50,000 48,000 Project I or II would require an investment of RM50,000. The company has a current market value of RM800,000. The estimated returns of the market in one year are: Good state 20%, Moderate state 15% and Poor state 10% respectively. Assume that the treasury bill rate as 9%. The research director projects that the company's share price will move in line with the market. Required (in no more than 1,000 words, show all relevant workings) (a) Calculate i market variance ii. systematic risk for Project I iii. systematic risk for Project II iv. covariance between Project I and the market v. covariance…

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Elon Musk Capital Project – Assessment #11 Suppose Elon Musk has an existing business making electric bicycles.   Sales are so strong that he is considering selling his existing factory and replacing it with a new factory.   A: The current factory can be sold for $100mm; it has a tax value of $50mm.The current factory produces annual after tax cash flow of $50mm.   Elon believe that after eight years from now, the existing factory would have a resale value of $20mm with a tax value then of $8mm. B: A new bicycle factory can be built for $250mm and equipment will cost $300mm plus installation costs of $50mm.  Assume the plant and equipment can be built and operational on day one. C: Expect working capital needs as follows (starting on day one):  Increase of $35mm in Accounts Receivable and $50mm of Inventory; expect increased $25mm of Accounts Payable. D: He initially projects after-tax cash flows of $200mm per year for eight years occurring on the last day of each year, starting at the…

Elon Musk Capital Project – Assessment #11 Suppose Elon Musk has an existing business making electric bicycles.   Sales are so strong that he is considering selling his existing factory and replacing it with a new factory.   A: The current factory can be sold for $100mm; it has a tax value of $50mm.The current factory produces annual after tax cash flow of $50mm.   Elon believe that after eight years from now, the existing factory would have a resale value of $20mm with a tax value then of $8mm. B: A new bicycle factory can be built for $250mm and equipment will cost $300mm plus installation costs of $50mm.  Assume the plant and equipment can be built and operational on day one. C: Expect working capital needs as follows (starting on day one):  Increase of $35mm in Accounts Receivable and $50mm of Inventory; expect increased $25mm of Accounts Payable. D: He initially projects after-tax cash flows of $200mm per year for eight years occurring on the last day of each year, starting at the…

Question 4   Kokomochi is considering the launch of an advertising campaign for its latest dessert​ product, the Mini Mochi Munch. Kokomochi plans to spend $5.0 million on​ TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $9.0 million this year and $7.0 million next year. In​ addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try​ Kokomochi's other products. As a​ result, sales of other products are expected to rise by $2.0 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 35%​, and its gross profit margin averages 25% for all other products. The​ company's marginal corporate tax rate is 21% both this year and next year.   What are the incremental earnings associated with the advertising​ campaign?   Complete the table​ below:  ​(Round to the nearest​ dollar.) Incremental Earnings Forecast Year 1 Year 2 Sales of…

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Question 1 Health for All (“H4A”) is launching a new innovative hand sanitizer. However, due to intense research and development required to meet regulatory requirements, H4A wants to ensure they charge the correct price to recover all these costs. Through their research they identified that if they charge $60 per bottle of sanitizer, 250 000 bottles will be demanded per year. They expect that the demand for sanitizers will fall in the next three years therefore they have estimated this product to have a life of 3 years. Given the current Covid-19 pandemic, many other businesses are also selling hand sanitizers. Therefore the market that H4A wants to enter has a very high elastic demand. It has thus been observed that if H4A increases its price by $2, the demand will fall by 2 000 bottles while a reduction in price by the same amount will increase demand by 2 000 bottles as well. The production of the sanitizers will incur the following costs per year at differing levels of production.…

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Question 2. Calculate the internal rate of return of an investment manually and with a financial calculator. LI Q.2.1. Kevin has a manufacturing company. He wants to increase the profit by investing in a new machine that has savings as follows: Yr. 1 $105,000 $95,000 $90,000 The new machine costs $250,000. The cost of capital is 15%. Does it make sense to invest in the new machine? Calculate IRR using the excel spreadsheet, and also using your calculator. Yr. 2 Yr. 3

4 a. Shimada Products Corporation of Japan is anxious to enter the electronic calculatormarket. Management believes that in order to be competitive in world markets, theprice of the electronic calculator that the company is developing cannot exceed $15.Shimada’s required rate of return is 12% on all investments. An investment of$5,000,000 would be required to purchase the equipment needed to produce the300,000 calculators that management believes can be sold each year at the $15 price.Required:Compute the target cost of one calculatorb. Poskey Corporation uses an activity-based costing system with three activity costpools. The company has provided the following data concerning its costs and itsactivity based costing system:Costs:Wages and salaries ............ $400,000Depreciation ...................... 160,000Utilities .............................. 100,000Total ................................... $660,000Distribution of resource consumption:Activity Cost PoolsAssembly Setting Up…

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K The owner of a number of gas stations is considering installing coffee machines in his gas stations. It will cost $300,000 to install the coffee machines, and they are expected to boost cash flows by $144,643 per year for their five-year working life. What must the cost of capital be if this investment has a profitability index of 17 OA. 6.57% OB. 3.28 % OC. 13.13% OD. 16.42%