Reference no: EM131188017
1. ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is 12%. (Round your answer to the nearest $1.)
2. Central Mass Ambulance Service can purchase a new ambulance for $200,000 that will provide an annual net cash flow of $50,000 per year for five years. The salvage value of the ambulance will be $25,000. Assume the ambulance is sold at the end of year 5. Calculate the NPV of the ambulance if the required rate of return is 9%. (Round your answer to the nearest $1.)
3. Fitchminster Armored Car can purchase a new vehicle for $200,000 that will provide annual net cash flow over the next five years of $40,000, $45,000, $50,000, $55,000, $60,000. The salvage value of the vehicle will be $25,000. Assume that the vehicle is sold at the end of year 5. Calculate the NPV of the ambulance if the required rate of return is 9%. (Round your answer to the nearest $1.)
4. Artie's Soccer Ball Company is considering a project with the following cash flows:
Initial outlay = $750,000
Incremental after-tax cash flows from operations Years 1-4 = $250,000 per year
Compute the NPV of this project if the company's discount rate is 12%.
5. You have been asked to analyze a capital investment proposal. The project's cost is $2,775,000. Cash inflows are projected to be $925,000 in Year 1; $1,000,000 in Year 2; $1,000,000 in Year 3; $1,000,000 in Year 4; and $1,225,000 in Year 5. Assume that your firm discounts capital projects at 15.5%. What is the project's NPV?
Disadvantages of the discounted payback decision rule
: One of the common disadvantages of the discounted payback decision rule is that I may cause:
|
Ability to pay its interest expense
: What does this tell you about Callaway's ability to pay its interest expense? Callaway's operating income can fall as much as ______ times the interest expense and the company would still be able to service its debt. The firm's return on equity is th..
|
Ethical strategies can be potentially dangerous
: Which of the following ethical strategies can be potentially dangerous for multinational companies in normal business operations? If you were using the 9-Cell industry attractiveness/Business Strength Matrix, what is correct?
|
Senior leadership-presenting strategic options for growth
: In single business companies, corporate strategies are important because: If you were in senior leadership and presenting strategic options for growth, which strategy would you recommend? If Starbucks expands its purchasing and procurement options to..
|
Calculate the NPV of the assembler if required rate of rate
: ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is 12%. Artie's Soccer Ball Company is considering a p..
|
The minitab output for a regression analysis
: The minitab output for a regression analysis relating the temñerature in a warehouse to the machine setting within the warehouse is given below. What is the t test statistic used to determine whether the setting is related to the temperature?
|
Establish transfer price
: McKenna Florida Division is currently purchasing a part from an outside supplier. the company 's, Alabama Division which has excess capacity, makes and sells this part for external customers at a variable cost of $22 and selling price of $34. if sale..
|
What happens to the expected return on the stock
: The common stock and debt of Northern Sludge are vlaued at $60 million and $40 million, respectively investors currently require a return of 16.7% on the common stock and 7.0% on the debt. If Northern Sludge issues an additional $18 million of common..
|
What is the ratio after it borrows
: River Cruises is all-equity-financed with 100,000 shares. It now proposes to issue $270,000 debt at an interest rate of 10% and use the proceeds to repurchase 27,000 shares at $10 per share. Profits before interest are expected to be $127,000. what i..
|