Net capital spending: Multiple Choice O O O is equal to ending net fixed assets minus beginning net fixed assets. is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense. reflects the net changes in total assets over a stated period of time. is equivalent to the cash flow from assets minus the operating cash flow minus the change in net working capital.
Q: What feature allows others (typically managers) to vote for shareholders who don't want to attend…
A: Straight voting-This voting system is used to elect directors or to vote on important matters like…
Q: You buy a used car for $6,000, taxes included. The dealership offers financing at 6% annual…
A: cost of car6000Down payment1000Annual interest rate compounded monthly6%total number of months…
Q: Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the…
A: Yield to maturity is the rate of yield received when a bond is kept till maturity. It is total…
Q: uppose that the simple annual returns on an investment over a 3-year period are: 8%, 2%, and 12%.…
A: Put option gives the opportunity to sell stock on the expiration but there is no obligation to do…
Q: You are evaluating a project for your company. You estimate the sales price to be $200 per unit and…
A: Operation cash flow represents the amount of cash generated by a firm from its normal business…
Q: The Electronics Division of Anton Company reports the following results for the current year:…
A: ROI of a company refers to its profitability which is calculated as a ratio of the income to the…
Q: The market price of a $1000 par value bond issued by Kramerica, Inc that makes semiannual coupon…
A: Solution:-Coupon rate is the percentage of annual coupon amount to the face value of the bond.To…
Q: Jensen Shipping is considering a project that has an initial cost of $218,000. The project will…
A: Initial Cost = $218,000Cash flow = cf = $49,000Weighted Average Cost of Capital = WACC = 15.8%Equity…
Q: Explain the main objective of corporate finance. b) Guest Berhad has pension liablity of RM 800…
A: The main objective of corporate finance is to maximize the value of the shareholders' wealth. This…
Q: A firm has a target capital structure of 45% common stock and 55% debt. It costs of equity is 12.5%…
A: WACC refers to the return that the company provides to its stakeholders on average for their…
Q: General Mills decides to produce Warm Delights internally (in-house), they would face an immediate…
A: IntroductionNet Present Value (NPV)The net present value (NPV) applies to a series of cash flows…
Q: Capital investments can be very risky; they are usually long-term decisions that require large sums…
A: Capital investments are also known as capital expenditures.These investments are made from a long…
Q: Use a two period binomial tree to price a 8 month American style call on on TFS struck at $8. The…
A: Financial derivatives known as call options and put options provide the holder the right, but not…
Q: Fezziwig International (FI) has been in the haberdashery business since 1869. It is an all-equity…
A: Modigliani & Miller's theory of the Value of a levered firm under proposition 2 (with taxes)…
Q: An account was opened on January 1, 1999 with a deposit of $12,000. Additional deposits of $100…
A: In compounding there is interest on interest including interest on interest on the principal amount…
Q: Rank the following three stocks by their level of total risk, highest to lowest. Rail Haul has an…
A: The coefficient of variation represents a measure of the dispersion of the data points relative to…
Q: A firm has a WACC of 8.35% and is deciding between two mutually exclusive projects. Project A has an…
A: Net present value refers to the method of capital budgeting used for estimating the viability of the…
Q: A bank in Toronto charges 3.25% commission to buy and sell currencies. Assume that the current…
A: Hi studentSince there are multiple questions asked, we will answer only first question.Domestic…
Q: NO ANCHOR Build a formula that calculates rent for 2016 and beyond based on 2015's rate as well as…
A: It is the case where future values of rent for the years 2016 to 2020 are to be calculated. In the…
Q: Six-month T-bills have a nominal rate of 3%, while default-free Japanese bonds that mature in 6…
A: The interest rate parity refers to the state where the risk-free rates of the countries are used to…
Q: Tropetech Inc. is looking at investing in a production facility that will require an initial…
A: Here, Initial Investment $ 500,000.00Cash Flow in case of weak Demand $ 120,000.00Cash Flow in case…
Q: Kingbird Corporation is involved in the business of injection moulding of plastics. It is…
A: The NPV calculates the difference between the present value of cash inflows and the present value of…
Q: When determining the best time to replace an existing asset, for what reason would you need to use…
A: Marginal analysis is an economic concept that examines the incremental changes in costs and benefits…
Q: Given the data in the following table, what is the IRR of Project B? 0 4 $170 -$600 -$520 $190 1…
A: To calculate the Internal Rate of Return (IRR) for Project B, we need to find the discount rate that…
Q: You are interested in buying the stock of a company. You expect the following annual dividends for…
A: Fair price of the stock is that amount which can be paid by the investor for purchasing the stock in…
Q: Oriole Corporation is considering purchasing a new delivery truck. The truck has many advantages…
A: Cash payback period.It is the time required to recover initial investment made in the project. 2.…
Q: Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each…
A: The value of a firm is determined by taking the sum of shareholders and claims of creditors
Q: Suppose the return of asset A to D, is given as follows: Asset 2018 2019 2020 2021 A 9% 10% -2 %…
A: Expected return is a financial concept used to estimate the average gain or loss an investor…
Q: Zoom Eriterprises expects that one yoar from now it will pay a total dividend of$4.7millionand…
A: Total payout= $9.4 millioncost of equity= 13.4%Number of shares outstanding= 5.4…
Q: Cirice Corporation is considering opening a branch in another state. The operating cash flow will be…
A: The discounting rate, or internal rate of return, brings discounted future cash flows to parity with…
Q: Bruichladdich Distillery has a debt/asset ratio of 0.55. The firm's equity multiplier is?
A: Debt Asset Ratio = 0.55
Q: Please don't provide answer in image format thank you. Minden Co. is considering buying new computer…
A: The Return on Average Investment (ROI) is typically calculated as the average annual profit divided…
Q: Using the information in the following table , what is the depreciation expense per year created by…
A: Given: Variables in the question:Cost of equipment=$ 25,600,000Salvage value = $…
Q: We talk about a problem in Corporate Governance in active monitoring. A monitor learns about the Bad…
A: The Net Present Value (NPV) of a project is a critical financial metric used to determine its…
Q: Answer whether each of the following statements is correct and explain your argument. \ (a)…
A: In portfolio management, risk refers to the uncertainty and potential variability of returns on an…
Q: can you answer d
A: Indifference curve is graph showing the different combination of risk and return for the given level…
Q: Alpha Industries is considering a project with an initial cost of $8 million. The project will…
A: Net present value (NPV) is a financial method used to evaluate the profitability of an investment or…
Q: You have been asked to calculate the required return for a stock that you are considering investing…
A: Risk free rate = rf = 1%Market Return = rm = 12%Beta = b = 1.2
Q: Romano Inc. has the following data. What is the firm's cash conversion cycle? Inventory Conversion…
A: Cash conversion cycle indicates the period taken by a firm to convert it's products into…
Q: Assume that the real rate of interest is 2.00 % and the inflation rate is 6.00% What is the value…
A: Real interest rate = 2%Inflation rate = 6%Period = 12 yearsFuture value = $12,895
Q: Bassett Fruit Farm expects its EBIT to be $381,000 a year forever. Currently, the firm has no debt.…
A: To calculate the unlevered value of the firm, we need to find the total value of the firm without…
Q: CyberSecure Inc. has annual growth rate of 4.6 percent and is equally as risky as the market. The…
A: Growth rate= 4.6%Current stock Price= $16Overall market rate of return= 10.9%Risk Premium=…
Q: Engineers of a company have $8000 for using as principal (anapara) to invest, and there are 3…
A: We are given $8,000 to invest in three available options- R1, R2, & R3.The total amount…
Q: A firm needs to raise $135 million to finance its expansion into new markets. The company will sale…
A: Amount required= $135 millionOffer price per share= $58Underwriter charges= 5%Required:Number of…
Q: (Related to Checkpoint 5.5) (Solving for n) Jack asked Jill to marry him, and she has accepted under…
A: The future value of money pertains to how much a certain amount of money will be worth at a later…
Q: Goodnight Films has 50,000 shares of stock outstanding with a par value of $.70 per share and a…
A: A stock split is a company's decision to split its existing stocks at a specified ratio, which leads…
Q: Purchasing Additional Insurance. Nancy is a widow with two teenage children. Nancy's gross income is…
A: Additional insurance coverage refers to the policy of the original amount to be endorsed which…
Q: The Ocean City water park is considering the purchase of a new log flume ride. The cost to purchase…
A: Here,No. of Ride per day is 150No. of riders in one ride is 35Total no. of working days in an year…
Q: (Solving for i) An insurance agent just offered you a new insurance product that will provide you…
A: It is a problem that requires calculating the interest rate earned on the investment. The interest…
Q: You are on options trader specializing in the Singapore dollar. The current spot rate is $0.60/S$. A…
A: 1 . Call option provides the holder of the option , the right and not the obligation to buy…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Please answer Part B and C. The following are answers from previous questions in case you need the below information. Operating Cash Flow: Operating Cash Flow (OCF)= Net Income + Depreciation – Increase in Working Capital. OCF=419,573+11,751-110,249= 321,075 Net Capital Spending: Net capital expenditures (NCE) = Fixed asset (current period) - Fixed asset (prior period) + depreciation (current period) NCE=258,251-261,779+11,751 =8,223 iii. Change in Net Working Capital Net Working Capital (NWC)= Current assets- current Liabilities Year 2019 : NWC =421,609-148,087 =273,522 Year 2020 : NMW= 550,572-166,801 =383,771 Change in Net Working Capital = 383,771-273,522=110,249 Sl.NO PARTICULARS AMOUNT EBIT + DEPRECIATION - TAXES = 597976+11751-178055= $ 431,672 ii] NET CAPITAL SPENDING: ENDING NET FIXED ASSETS - BEGINNING NET FIXED ASSETS + DEPRECIATION = 258251-261779+11751= $ 8223 iii] CHANGE IN NET WORKING…vanhoe Company accumulates the following data concerning a proposed capital investment: cash cost \$212.060. net annual cash flows $43,000, and present value factor of cash inflows for 10 years is 5.22 (rounded). (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg(45).) Determine the net present value, and indicate whether the investment should be made. dont give answer in image thnkuCash flow from assets (CFFA) is also known as “Free cash flow” (FCF). CFFA (or FCF) is calculated by adding Net Income to Depreciation and Interest Expense, then subtracting capital expenditures for the period, and then subtracting any increases in net working capital required to keep the operation running and growing in accord with plans. NOW SUPPOSE that your business had 25,000 in Net Income; 1,400 in Depreciation Expense; 1,500 in Capital Expenditures; 7,500 in Interest Expense; and your Net Working Capital account was required to increase by 500. FIND: CFFA The answer I came up with was 32,400. Is that correct?
- Cash flow from assets (CFFA) is also known as “Free cash flow” (FCF). CFFA (or FCF) is calculated by adding Net Income to Depreciation and Interest Expense, then subtracting capital expenditures for the period, and then subtracting any increases in net working capital required to keep the operation running and growing in accord with plans. NOW SUPPOSE that your business had 29,000 in Net Income; 1,700 in Depreciation Expense; 1,900 in Capital Expenditures; 5,500 in Interest Expense; and your Net Working Capital account was stable (NO CHANGE) across the period. FIND: CFFA I got 34,300. Is that correct?PAR Ltd is considering an investment and has determined the following: Expected net cash flows: – Year 1 $65,967 – Year 2 $70,290 – Year 3 $135,391 – Year 4 $103,435 – Year 5 $100,998 Annual depreciation $20,660 Period of investment 5 years Initial investment $611,246 Value at end of the investment period $124,671 Calculate the Accounting Rate of Return. Express your answer in a percentage with 2 decimal places.Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: MaintenanceEquipment RampFacilities ComputerNetwork Amount to be invested $614,361 $418,741 $186,316 Annual net cash flows: Year 1 318,000 229,000 134,000 Year 2 296,000 206,000 92,000 Year 3 270,000 183,000 67,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 20%, prepare a net present value analysis for each proposal. Use…
- the following table tracks the main components of net working capital over the life of a 4-year project. calculate the investment in net working capital in year 3. in the presented answers, a negative number represents a cash outflow (additional investment) and a positive number represents a cash inflow (recapture of a previous investment). year 1 year 2 year 3 year 4 year 5 Accounts receivable 0 156,000 231,000 196,000 0 inventory 78,000 133,000 133,000 98,000 0 accounts payable 26,500 51,500 53,000 36,500 0Compute the NPV statistic for Project U if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and roundyour final answer to 2 decimal places.) Project U Time: 0 1 2 3 4 5 Cash flow: -$2, 500 $750 $2, 480 -$720 $700 -$300Compute the NPV for Project M if the appropriate cost of capital is 8 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project M Time: 0 1 2 3 4 5 Cash flow: −$1,600 $470 $600 $640 $720 $220 What is the NPV?
- Company Express S. A. asks you to construct cash flows for following three (3) investment projects, containing following information:PROJECT 1a. Sales (in ThCh$):- Year 1: 90,000- Year 2: 55,000- Year 3: 75,000- Year 4: 190,000b. Cost of sales is estimated at 53% of sales.c. Depreciation for year is ThCh$ 15,000 per period (period 1 to 3). In year 4 there is a sale of machinery that results in a gain on sale of non-current assets of ThCh$ 9,800. Total depreciation for year 4 is ThCh$ 12,500.d. Administrative expenses are equivalent to 17% of sales.e. In period 0 there is an investment of ThCh$ 58,000.f. There is credit financing of ThCh$ 32,000 which is amortized in equal parts of ThCh$ 8,000 per period with a financial expense of ThCh$ 3,700 per period.g. There is an investment in working capital of ThCh$ 24,000 in period 0, which is recovered in period 4.h. In period 4 there is an investment in land of ThCh$ 40,000.i. Income tax rate is 17%. Calculate: cash flow per period. Please…A. 20Y5 Annual net cash flow is incorrect. B. Present value of annual net cash flow Less investment are incorrect. a. For each year, subtract the driver salaries and operating costs from the revenues. For 20Y3 only, add the residual value. b. Multiply the present value of $1 factor for each year by that year's net cash flow (from a). Subtract the amount to be invested from the total present value of the net cash flow.Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: MaintenanceEquipment RampFacilities ComputerNetwork Amount to be invested $923,468 $584,381 $269,896 Annual net cash flows: Year 1 400,000 292,000 168,000 Year 2 372,000 263,000 116,000 Year 3 340,000 234,000 84,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Assuming that the desired rate of return is 12%, prepare a net present value analysis for each proposal. Use…