Lockheed Tri Star

Free cash flows of the project for next five years can be calculated by adding depreciation values and subtracting changes in working capital from net income. In 2010, there will be a cash outflow of $2.2 million as capital expenditure. In 2011, there will be an additional one time cash outflow of $300,000 as an advertising expense. Using net free cash flow values for next five years and discount rate for discounting, NPV for the project comes out to be $2907, 100. The rate of return at which net present value becomes zero i.e.

Estimate the project’s operating cash flows for each year of the project’s economic life. (Hint: Use Table 2 as a guide)

What is the net present value of this follow-up investment and the combined base and expansion investments?

Here, in the given pro forma in Exhibit 8, the cost of salt and other in 1984 was 1836 while that in 1983 is 1956. Thus, the growth rate is (1956-1836)/1836=6.6%.

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

income is $26.03 for year 1. Similarly, the present value of the firm at time 1 is

See Table 1: Expected non-operating cash flow when the project is terminated at year 4 = 165,880$

"e. What is each project's MIRR at a cost of capital of 12%? At r = 18%? (Hint: Consider Period 7 as the end of

Generate 1,5 billion tax during project, $16 million annually and additional $375 million local property

If you invest in the project after five years you will get $ 463,188.77 which is $ 13,188.77 more.

ML had developed a policy of selling manual machines and renting automatic machines. Manual machines did not cost much, did not require service, and could be modified to attach different fasteners inexpensively. Automatic machines were rented on an annual basis because they would have been more expensive to sell and it provided annual income to ML. However, about 700 of the rented machines were returned each year. During the time that machines were in inventory, ML would modify the machines to attach different fasteners. This was expensive with an average cost per modification of $2000. If all 700 machines were modified during a given year this would have cost $1.4 million per year. It was also industry practice to provide preventative maintenance and

The cash flow has been discounted at rate of 10%. The NPV is £ - 46,700 (negative)

2nd Year: $78,000 - $35,000 - $22,000 (cost investment remaining from 1st year) = $21,000

Best for city to wait until the end of year two to pay this to the firm. PV is $256,522/(1.20)2 = $178,140