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- REPLACEMENT CHAIN The Lesseig Company has an opportunity to invest in one of two mutually exclusive machines that will produce a product the company will need for the next 8 years. Machine A costs 8.9 million but will provide after-tax inflows of 4.5 million per year for 4 years. If Machine A were replaced, its cost would be 9.8 million due to inflation and its cash inflows would increase to 4.7 million due to production efficiencies. Machine B costs 13.9 million and will provide after-tax inflows of 4.3 million per year for 8 years. If the WACC is 9%, which machine should be acquired? Explain.46. Palau, Inc. requires all its capital investments to generate an internal rate of return of 14 percent. The company is considering an investment costing P80,000 that is expected to generate equal annual cash inflows for 5 years. To meet the 14 percent minimum acceptable rate of return, the estimated annual cash inflow (ignoring income taxes) is: Group of answer choices P23,303 P51,550 P154,033 P274,648[6:46 am, 15/01/2022] Mahmoud: 19. Cost of Capital. Pollution Busters, Inc., is considering a purchase of 10 additional carbon sequesters for $100,000 apiece. The sequesters last for only 1 year until saturated with carbon. Then the carbon is removed and sold. (O LO4) a. Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is guaranteed to be $115,000. How would you determine the opportunity cost of capital for this investment? b. Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange. Carbon prices have been extremely volatile, but Pollution Busters' CFO learns that average rates of return from investment on that exchange have been about 20%. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case? Is the purchase of an additional sequester a worthwhile capital investment if she expects that the price of extracted carbon will $115,000? please show the strps
- H5 Printing World thinks it may need a new colour printing press. The press will cost $470,000 but will substantially reduce annual operating costs by $232,000 a year, before tax. The press has a 35% CCA rate and will be in its own asset pool. The first CCA deduction is made in year 0. The press will operate for 4 years and then be worthless. The cost of equity for Printing World is 11%, the cost of debt is 8%, and the company’s target debt-equity ratio is 1.00. The company’s tax rate is 35%. a. What is the NPV of buying the press? (Do not round intermediate calculations. Round your answer to the nearest dollar.) b. The equipment manufacturer is offering to lease the press for $115,000 a year, for 4 years, payable in advance. Should Printing World accept the offer?6. A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the present value of the tax cashflow at time 1, to the nearest £100? A £14,700 B £26,200 C £28,800 D £144,00013- Evaluate the following statements about NPV and IRR. I. Majed said, “NPV increases as discount rate decreases”. II. Nesrin said, “IRR increases as discount rate decreases”17- CBA Elevator costs $50,000 with an expected life of 5 years.The elevator will be depreciated on a straight-line basis to an expected salvage value of zero. The annual operating costs are $8,000.Applicable tax rate is 30% and required rate of return is 10.0%. What is the net present value of the elevator?
- #2 Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.72 million and create incremental cash flows of $434,915.00 each year for the next five years. The cost of capital is 9.16%. What is the internal rate of return for the J-Mix 2000? Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))5. Cooper Industries is considering a project that would require an initial investment of P235,000. The project would result in cost savings of P70,110 annually for the next five years. The internal rate of return is: Group of answer choices 13% 18% 11% 15%A4 9c We find the following information on NPNG (No-Pain-No-Gain) Inc.: EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000 These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future: EBIT: 20%Depreciation: 10%Change in net working capital: 15%Net capital spending: 10% The firm’s tax rate is 35%, and it has 1,000,000 outstanding shares and $8,000,000 in debt. We have estimated the WACC to be 15%. c. Calculate the firm’s share price at time 0.
- 11. Find the capitalized cost of an equipment that costs P55,000.00 if the annual maintenance cost and operational cost is P10,000.00 and money worth 5% per annum. 270,000.00 250,000.00 12. How long in years will it take the money to triple its amount when deposited at the rate of 12% compounded monthly. 9.8 10 8.7 9.2 255,000.00Q4. The THK Transportation estimates the cost of upgrading a highway to be $85 million now. Resurfacing and other maintenance will cost $550,000 every 3 years. Annual revenue is expected to be average $18.5 million. If i = 8% per year, what is a) the capitalized cost now, b) the equivalent A value of this capitalized cost?12) Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $18 million, and production and sales will require an initial $1 million investment in net operating working capital. The company's tax rate is 25%. Enter your answers as a positive values. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places. a) What is the initial investment outlay? $ ______million b)The company spent and expensed $150,000 on research related to the new project last year. What is the initial investment outlay? $ ______ million c) Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.7 million after taxes and real estate commissions. What is the initial investment outlay? $ ______ million
