Calculate the project''s coefficient of variation

Assignment Help Finance Basics
Reference no: EM132185216

Questions -

Q1. Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 40%, and a 13% cost of capital is appropriate for the project.

Calculate the project's NPV.

Calculate the project's IRR.

Calculate the project's MIRR.

Calculate the project's payback.

Q2. Assume management is unsure about the $110,000 cost savings - this figure could deviate by as much as plus or minus 20%. Calculate the NPV if cost savings value deviate by plus 20%. Round your answer to the nearest dollar.

Calculate the NPV if cost savings value deviate by minus 20%.

Q3. Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the working capital (WC) requirement. She asks you to use the following probabilities and values in the scenario analysis:



Worst case 0.25 $  88,000 $28,000 $40,000
Base case 0.45 110,000 33,000 35,000
Best case 0.30 132,000 38,000 30,000

Calculate the project's expected NPV.

Calculate the project's standard deviation.

Calculate the project's coefficient of variation.

Reference no: EM132185216

What is your estimate of carpetto cost of common equity

Assuming you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpetto's cost of common equity? Round your answer to two decimal p

What was taylor internal rate of return

In July of 2012, Taylor purchased 2,000 shares of XYZ common stock for $75,000. He then sold 1,000 shares of XYZ in July of 2013 for $39 per share. The remaining 1,000 share

Calculate price-to-sales and price-earnings

The following are some key accounting numbers and market values (in thousands) for Target Corporation and Wal-Mart Corporation for 2014 (year ending in 2015) from Yahoo Fina

Develop a table in excel that can be used to track the value

You will be developing a simple portfolio that will be used for analysis over the following five weeks. You are given $10,000 to allocate to a portfolio. You must allocate 100

What is the weighted average portfolio return

Suppose you add a new stock to your portfolio. NewCo now accounts for 50% of your total portfolio. The expected dollar return on NewCO stck is 19% and its standard deviation

Comparing and contrasting the best performing sectors

Source ( ) Write a 3-5 page paper in APA format (minimum of two references) comparing and contrasting the Best Performing

Implements a put option hedge

Determine the amount of dollars that Narto Co. expects to receive at the end of 1 year (after accounting for the option premium) if it implements a put option hedge.

Equity in the computation of sports wacc

If the common shares are selling for $26.5 per share, the preferred shares are selling for $14.0 per share, and the bonds are selling for 96.85 percent of par, what would be


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd