You own an oil pipeline that will generate a $2.9 million cash return over the coming year. The pipeline’s operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oil shipped is declining, and cash flows are expected to decline by 6.0% per year. The discount rate is 5%.   a. What is the PV of the pipeline’s cash flows if its cash flows are assumed to last forever?      b. What is the PV of the cash flows if the pipeline is scrapped after 16 years?

Q: unland, Inc. management is considering purchasing a new machine at a cost of $4,390,000. They expect…

A: solution NPV = present value of inflow - present value of outflow discount rate = 15% cash flow…

Q: Krishna India owns an oil pipeline which will generate Rs. 12 crore of cash income in the coming…

A: Income in coming year = 12,00,00,000 Growth in cash flows = -3% Discount Rate = 12%   Present Value…

Q: uick computing currently sells 19 million computer chips each year at a price of $23 per chip. It is…

A: Impact on the Cash flow from manufacture of new chips is calculated as follows: Increase in sales of…

Q: Blossom, Inc. management is considering purchasing a mew machine at a cost of $4,210,000. They…

A: NPV can be calculated by following function in excel =NPV(rate,value1,[value2],…) + Initial…

Q: Chrustuba Inc. is evaluating a new project that would cost $8.2 million at t = 0. There is a 50%…

A:

Q: We are examining a new project. We expect to sell 6,500 units per year at $43 net cash flow apiece…

A: Net Present Value(NPV) is excess of PV of inflows over PV of cash outlays of proposed project. It is…

Q: An investment that costs $20,000 will produce annual cash flows of $5,000 for a period of 6 years.…

A: Capital budgeting: It is a method of evaluating the projects which required huge investments and…

Q: Och, Inc., is considering a project that will result in initial pretax cash savings of $2 million at…

A: The net present value of a capital project shows its profitability position. It shows an absolute…

Q: You want to set up a new private business. The new business will generate a net cash inflow of…

A: NPV is defined as the difference between present value of cash inflows and present value of cash…

Q: Should the company make this investment?

A:

Q: Your firm is considering the purchase of two alternative machinery: Machine A has an expected life…

A: The replacement chain method: This method is a capital budgeting technique that is used when…

Q: Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also,…

A: The current worth of the free cash flows of a company is term as the value of operations of a…

Q: Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for 5 years.…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: Miller Brothers is considering a project that will produce cash inflows of $61,500, $72,800,…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: You are trying to decide whether to make an investment of $500 million in a new technology to…

A: The capital budgeting is a technique that is used to evaluate the profitability of the project and…

Q: what will the investment generate? (Do not round your intermediate calculations. Round your answer…

A:

Q: You are considering opening a new plant. The plant will cost $100 million upfront. After that, it is…

A: The question is related to Capital Budgeting. The Net Present Value is calculated as under, Net…

Q: JFINEX Corporation is considering a new project that will cost 150,000. The project is expected to…

A: In the given case since the profitability index is more than 1 that is present value of cash Inflows…

Q: Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also,…

A: SOLUTION- Compute the estimated value of operations:   Current price=D1/(Required return-Growth…

Q: Winters Corp. is considering a new product that would require an investment of $18 million now, at t…

A: Initial Investment = $18,000,000 Cash flows when demand is 50% high probability= $9,000,000 Cash…

Q: Kingston, Inc. management is considering purchasing a new machine at a cost of $4,150,315. They…

A: given, r=15% YEAR CASHFLOW 0 -4150315 1 756424 2 834614 3 932657 4 1071731 5 1298352…

Q: The company you work for is considering a new product line that is projected to have the net cash…

A: 1 given, inflation adjusted rate =20% year cashflow discounting factor @ 20% pw 0 -10,000 1…

Q: Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more…

A: Using the IRR function in excel

Q: GoGo Inc. is considering a new project that requires an initial investment of $36140 and will…

A: Answer : Profitability Index = Present value of cash inflows / Present value of cash outflows

Q: The company you work for is considering a new product line projected to have the net cash flows…

A: Computation:

Q: Quick Computing currently sells 17 million computer chips each year at a price of $11 per chip. It…

A: Cash flows are the movement of real or virtual money within the organization due to business…

Q: Assume a company is going to make an investment of $300,000 in a machine and the following are the…

A: Capital budgeting is used to evaluate the different levels of investment projects. The organization…

Q: TG Instruments is considering an investment of $500,000 in a new product line.  The company will…

A: solution given Investment required $500000 desired rate of return 15% Expected…

Q: Feldman Corp. is considering a new product that would require an investment of $8 million at t = 0.…

A: NPV is the net current worth of cash flows that are expected to occur in the future. It is computed…

Q: A new company estimates that by investing in a new process, it will increase its sales by $ 2…

A: Year Cash Inflow 1                         -   1.5    2,000,000.00 2    1,500,000.00…

Q: Alpha Industries is considering a project with an initial cost of $8.1 million. The project will…

A: Dear Student, As per the Bartleby policy, In case of multiple questions and all questions are…

Q: It is estimated that a certain piece of equipment can save $22,000 per year in labor and materials…

A: Given that: Saving per year = $22000 Required rate of return = 15%

Q: You have found an investment opportunity that will provide annual cash flows of $1,234 for 5 years…

A: Here, Cost is $6789 Annual Cash Flows is $1234 Time Period is 5 years Required Return is 12%

Q: Chance, Inc. is considering a project with an initial cost of $1 million. The project will not…

A: The question is based on the concept of capital budgeting, which can be calculated by help of net…

Q: A process engineer plans on investing $5,000.00 now so that they may withdraw $500.00 a year for 12…

A: Cash flow diagram is a geographical representation shows the series of cash inflows and cash…

Q: Your project has the following projected positive operating cash flows (all occurring at the end of…

A: given information   wacc = 10% treasury rate = 4% project positive cash flow are $1,000 $2,000…

Q: ABC Company is evaluating a project that can generate the following revenues: P4,600 in year one,…

A: Calculation of Effective Annual Rate = (1 + 12%/2)2 - 1…

Q: Calculate NPV of the project

A: Net present value (NPV) is the difference of present value of all the future cash flows and the…

Q: Mosaic is evaluating a manufacturing plant that has the potential to generate revenue of $2…

A: Given: Particulars Amount in Millions Stock price $2 Up price % 20.00% Lower price % 25.00%…

Q: Krishna India owns an oil pipeline which will generate Rs. 12 crore of cash income in the coming…

A: Perpetuity is a perpetual annuity, it is a series of equal infinite cash flows that occur at the end…

Q: The private firm TranspCom needs to invest $300 million to a freeway construction and management…

A: Calculation of present worth of all potential investments:Answer:The present worth of all these…