What is the npv for the tool investment

Assignment Help Finance Basics
Reference no: EM13298266

The Miracle company is evaluating the purchase of a tool that falls under the 3-year asset life category for MACRS and is expected to a 4 year life. The tool will cost $700,000. If the tool is purchased, inventories and accounts payable will have to increase upon purchase by $50,000 and $10,000, respectively. With the additional flexibility from the manufacturing tool, sales are expected to increase by $600,000 the first year and not grow further while maintenance expenses will increase $300,000. Any net operating working capital will be recovered at the end of the project as well as the manufacturing tool can be sold for $50,000. Miracle co. has a 10% WACC and a 40% tax rate. What is the NPV for the tool investment?

Reference no: EM13298266

Questions Cloud

Explain what is the percent ionization of a solution : The Ka of a monoprotic weak acid is 2.99 × 10-3. What is the percent ionization of a 0.108 M solution of this acid
How fast must you travel : Suppose you are planning a trip in which a spacecraft is to travel at a constant velocity for exactly ten months, how fast must you travel
Determine the depth of flow in the channel y2 : Water flows down a spillway at the rate q = 15 m^3/s into a horizontal channel where v1 = 20 m/s. Determine the depth of flow in the channel y2 that will casue the hydraulic jump to occur in the channel. Determine the headloss hL in the jump.
Calculate debt-equity ratio : Calculate debt-equity ratio, fixed assets ratio,proprietary ratio. Current ratio and liquidity ratio.
What is the npv for the tool investment : Any net operating working capital will be recovered at the end of the project as well as the manufacturing tool can be sold for $50,000. Miracle co. has a 10% WACC and a 40% tax rate. What is the NPV for the tool investment?
How fast is joe moving : Joe is moving through space at an unknown speed. His clock runs 4 minutes per hour slower than Jane's clock, How fast is Joe moving
How to calculate the ph of the resulting solution : Calculate the pH of the resulting solution after the following volumes of HNO3 have been added. (e) 50.0 mL (f) 100.0 mL Show the work please
Should diamond bank pursue this strategy : Cross Exchange Rate: Assume Poland's currency (the zloty) is worth $.17 and the Japanese yen is worth $.008. What is the cross rate of the zloty with respect to yen? That is, how many yen equal a zloty?
What is the resulting speed of the particle : A particle with a mass of 3.65×10?24 kg and a charge of 6.40×10?19 C starts at rest and is accelerated for a distance of 0.104 m through a uniform electric field having strength E = 7.25×104 N/C

Reviews

Write a Review

Finance Basics Questions & Answers

  What must the expected return on this stock be

A stock has a beta of 1.7, the expected return on the market is 11 percent, and the risk-free rate is 4.4 percent. What must the expected return on this stock be? HINT: Use the Security Market Line.

  How much would the required rate of return increase

Type your MFI Inc. has a beta of 1.5. The risk free rate is 8 percent and the market return is 13 percent. A new expansion project would increase the company's risk to 1.8. How much would the required rate of return increase?

  Estimate value without leverage

Marpor Industries has no debt and expects to generate free cash flows of 16 million dollar every year. Marpor believes that if it permanently increases its level of debt to 40 million dollar,

  What is her portfolio beta

An individual has $30,000 invested in a stock with a beta of 0.7 and another $40,000 invested in a stock with a beta of 2.2. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal pla..

  Compute bonds yield to call

A newly issued corporate bond has twenty years to maturity. The bond has a coupon rate of 8 percent and pays interest semiannually. Also the bond is callable in six years at a call price equal to 115% of par value.

  Should the kruegers be ordered to pay

The Kruegers occupied the new structure but refused to make the last payment under the contract. Pisani filed a suit in a Connecticut state court to collect. Do you think Pisani substantially performed its obligations? Should the Kruegers be order..

  Explain what is the cost of new equity

Bubba plans to raise new capital for expansion explain what is the cost of new equity if flotation costs are 8% of the price

  What is the projects equivalent annual cost or eac

A 5-year project has an initial fixed asset investment of $15,540, an initial NWC investment of $1,480, and an annual OCF of -$23,680. The fixed asset is fully depreciated over the life of the project and has no salvage value.

  What is the break-even cost per kilowatt-hour

You require a return of 10 percent and use a light fixture 500 hours per year. What is the break-even cost per kilowatt-hour?

  Exchanging dollars for euro

If I plan to go to Germany thirty days and the spot exchange rate is $1.30=1 euro. The thirty day forward rate is $1.36=1 euro.

  Advantages and disadvantage of risk in investment

The concept of risk is based on uncertainty about future outcomes. Write down the advantages and disadvantage of risk in investment.

  Determine accounts how much receivables decline

McNally Corporation has sales of $1,000,000 million per year, all on credit terms calling for payment within thirty days, and its accounts receivable are $200,000.

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