End of period Cash flows 1 $5,000 2 3,000 3 2,000 4 1,000 5 500 Assume a cost of money of 10 percent. What is the maximum amount the company could pay for the machine and still be financially no worse off than if it did not buy the machine?
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| End of period | Cash flows |
| 1 | $5,000 |
| 2 | 3,000 |
| 3 | 2,000 |
| 4 | 1,000 |
| 5 | 500 |
Assume a cost of money of 10 percent. What is the maximum amount the company could pay for the machine and still be financially no worse off than if it did not buy the machine?
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- 7.1 A project will increase revenue from $1.7 million to $2.6 million. Wages are 40% of revenue. Maintenance on the machine will be $31,000 less than it is on the machine that will be replaced. What is the incremental net revenue (i.e. change in revenue minus expenses) that will result from accepting this project? a. $0.540 million b. $0.571 million c. $0.900 million d. $0.509 millionCash Flow (1,650,000) 330,000 365,000 380,000 415,000 405,000 370000 294,000 Insert your answer. 5. If a company has a required rate of return of 15%, should the following project be accepted based on these expected cash flows below?A3 8avi You are considering a new product launch. The project will cost $680,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 100 units per year, price per unit will be $19,000, variable cost per unit will be $14,000, and fixed costs will be $150,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. Ignore the half-year rule for accounting for depreciation. a. Calculate the following six numbers for this project. Round your answers to two decimal places. (vi) Average Accounting Return (AAR in %) Hint: Net Income = {[(Price – variable cost)*Quantity Sold] – Fixed Costs – Depreciation} * (1 – Tax rate)
- A4 9a We find the following information on NPNG (No-Pain-No-Gain) Inc.: A4 9a 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%. a. Calculate the EBIT, Depreciation, Changes in NWC, and net capital spending for the next four years.7. Assume a company is going to make an investment of $300,000 in a machine and the following are the cash flows that two different products would bring in years one through four. The company's required rate of return is 12%. Option A Option B Product A Product B $190,000 $150,000 190,000 180,000 60,000 60,000 20,000 70,000 Using the appropriate EXCEL spreadsheet in the Chapter11 NPV IRR Analysis.xlsx Download Chapter11 NPV IRR Analysis.xlsx, answer the following questions: What is the NPV for Option A? What is the NPV for Option B? What is the IRR for Option A? What is the IRR for Option B? PLEASE NOTE #1: The dollar amounts will be with "$" and commas as needed and rounded to two decimal places (i.e. $12,345.67). Round your IRR answers, in percentage format, to two decimal places (i.e. 12.34%). Given the above answers, which project should the…A company only has £2,000 to invest at time t0 in projects P, Q and R. Each project is infinitely divisible but cannot be undertaken more than once. Project Investment at t0 NPV P £700 £224 Q £1,000 £360 R £1,500 £510 How much should be invested in project R to maximise the NPV achieved? A £0 B £1,000 C £1,350 D £2,000
- question 3 a) Price RM54 per unit Variable cost RM30 per unit Fixed costs RM9,000 Required return 15% Initial investment RM18,000 Life 4 years Assume the initial investment id depreciated straight line to zero over the life of the project. Ignoring the effect of taxes, calculate: i) Accounting break-even quantity. ii) Cash break-even quantity iii) Financial break-even quantity iv) Degree of operating leverage at financial break-even lvel of output.Question 9: You have a opportunity to make a investment that has $10.000,000 landing, 1.500.000 machine, outsourcing 500.000 and finance cost 1.000.000. Machines have 1.000.000 scrap value at end of 5th year. You will pay interest payment at the end of project, that is $400.000. If you make this investment now, you will receive $4.500,000 one year from today, $3.000,000, $5.000,000 and $ 4.000,000 respectively. The appropriate discount rate for this investment is 15 percent. Tax rate is % 30. Should you make the investment?Q) The maintenance costs associated with a machine are $2000 per year for the first ten years and $1000 per year thereafter. The machine has an infinite life. If interest is 10% per year, what is the present worth of the annual disbursements? Solve it early. Not explain I'm excel work. Typed or handwriting use onlys
- Tiffany Co. is analyzing two projects for the future. Assume that only one project can be selected. Project Y Project X Cost of machine P680,000 P600,000 Net cash flow: Year 1 240,000 40,000 Year 2 240,000 260,000 Year 3 240,000 260,000 Year 4 0 200,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected? Group of answer choices Project Y. Project Y because it has a lower initial investment. Both X and Y are acceptable projects. Project X. Neither X nor Y is an acceptable project.A3 8aii You are considering a new product launch. The project will cost $680,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 100 units per year, price per unit will be $19,000, variable cost per unit will be $14,000, and fixed costs will be $150,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. Ignore the half-year rule for accounting for depreciation. a. Calculate the following six numbers for this project. Round your answers to two decimal places. (ii) Profitability Index (PI)Q. 1 Fatih's plant is trying to decide to buy another CNC machine or not. The machine will cost $20,000 when purchased. Maintenance will cost $1000 per year. The device will generate revenues of $5000 per year for 5 years. The salvage value is $7000. Draw and simplify the cash flow diagram.