Considering the purchase of a machine with capital budget

Assignment Help Financial Management
Reference no: EM131023094

Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a machine with the following capital budget: Initial Investment $62,000 RATFCF Year 1 $22,000 RATFCF Year 2 $30,000 RATFCF Year 3 $38,000 What is the machine’s NPV? A)$4,824 B)$5,783 C)$6,014 D) $5,442

Reference no: EM131023094

Questions Cloud

Depreciate the cost of the tools on a straight-line basis : Kohers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years. The firm has the option to buy these tools. The firm will depreciate the ..
The accounting break-even production quantity for a project : The accounting break-even production quantity for a project is 5,799 units. The fixed costs are $92,640, the depreciation is $36,210, and the sales price per unit is $48.29. What is the variable cost per unit?
Calculate net present value-modified internal rate of return : An expansion project being considered by your firm has an initial cost of $1,250,000 and expected net cash flows of $270,000 per year for the first 3 years, and $380,000 per year for the next three years. Calculate the Net Present Value (NPV), the Mo..
Granfield company is considering eliminating : Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,200. The division sales for the year were $963,800 and the variable costs were $477,000.
Considering the purchase of a machine with capital budget : Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a machine with the following capital budget: Initial Investment $62,000 RATFCF Year 1 $22,000 RATFCF Year 2 $30,000 RATFCF Year 3 $38,000 What is the machin..
One result of more institutional ownership-restructuring : Corporate restructuring has been one result of more institutional ownership. Restructuring can cause
Ready company has two operating departments : The total amount of administration expense that should be allocated to the Assembly Department for the current period is:
Adoption of electronic funds transfer affect use of float : How will widespread adoption of electronic funds transfer affect the use of "float"?
The partnership form of an organization : The partnership form of an organization

Reviews

Write a Review

Financial Management Questions & Answers

  Get the land designated qualified farm property

A person owns a section of farm land and is cash renting it to a long time neighbour who is not a relative. What does this person have to do to get the land designated Qualified Farm Property?

  Company needs to decide between two machines

Company needs to decide between two machines. Which machine would you recommend?

  What is the value per share of the companys stock

A stock last paid dividends amounting to $10 and the dividends are expected to grow constantly into the foreseeable future by 5%, what is the value of the stock today if the required rate is 10% And Millard Brothers is expected today a $2 per share d..

  What is the cost of equity if the aftertax cost of debt

Dee’s Toys has a target debt-equity ratio of .55. Its WACC is 12.4 percent and the tax rate is 34 percent. What is the cost of equity if the aftertax cost of debt is 5.5 percent?

  Which loan should she sign up for

Susan wants to buy a house for $200,000. US Bank will give her the loan at 3.5% for 30 years if she puts 20% down and Dacotah Bank will give her the loan at 3.8% for 30 years if she puts 10% down. There are NO other options. which loan should she sig..

  What is cost of equity-how does function in cost of capital

What is cost of equity and how does it function in the cost of capital? To increase a firm’s value, results should show your WACC is moving in which direction? What are those skills?

  How did your returns compare

You bought 100 shares of star bucks corp. (sbux) 7 years ago (1aug'95) for $5.90 per share and sold the 100 shares today for $20.31 each. what are your returns? at the same time your sister bought 100 shares of coca- cola (ko). how did your returns c..

  Current estimated value and growth rate

Last Year's Dividend (Do) $2.80. Growth rate for year 1 (g1) 25%. Current Estimated Value (Po) = If the stock was currently selling for $50, would you buy it yes or no?

  What is the portfolio beta-what is beta of your portfolio

You own a stock portfolio invested 15 percent in Stock Q, 33 percent in Stock R, 40 percent in Stock S, and 12 percent in Stock T. The betas for these four stocks are 1.4, .5, 1.5, and .8, respectively. What is the portfolio beta?  What is the beta o..

  The yield curve almost always slopes upward

Over the last 5 years, the Russell small stock index has consistently out-performed the Russell large stock index. The S&P400 index is composed of the 400 largest stocks in the S&P500. The yield curve almost always slopes upward. An asset that last y..

  Most basic type of capital expense risk

_________ is the most basic type of Capital Expense Risk, not taking into account the effects of the portfolio.  ________ is an integral part of the Free Cash Flow Calculation, and is also known as a non-cash expense.

  How many miles east from the harbor has the boat traveled

A boat leaves the entrance of a harbor and travels 57 miles on a bearing of N 11 E. How many miles north and how many miles east from the harbor has the boat traveled? A) 57 mi N, 57 mi E B) 56 mi N, 10.9 mi E C) 293.2 mi N, 11.1 mi E D) 10.9 mi N, 5..

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