Intro Finance Assignment Help, Other Engineering

QUESTION 2: Wing Yin Tsui, CEO of Lian Huang & Wong Bin Dean Hwang Manufacturing Limited is considering a four year project. The project requires an initial investment of $10,000,000 to buy new equipment. The equipment will be depreciated straight line to zero over the project’s life. The company believes it can generate $5,000,000 in pretax revenues in year 1. Revenues will increase at 20% per year. Total pretax operating cost would be 40% of the pretax revenues. Net working capital will be 20% of the pretax revenue for the year. Net working capital will be fully recovered at the end of the project. Revenues and operating costs will occur at the end of the year and investment in net working capital will be made at the beginning of the year. The tax rate is 40% and the discount rate is 12%.

1) What is the NPV of the project?

2) Now compute the project’s NPV assuming the project is abandoned after one year. The equipment will be salvaged for $8,000,000. Any gain or loss due to selling the equipment for other than the book value will create taxable gain/loss.
Posted Date: 4/4/2012 9:49:11 PM | Location : United States







Related Discussions:- Intro Finance Assignment Help, Assignment Help, Ask Question on Intro Finance Assignment Help, Get Answer, Expert's Help, Intro Finance Assignment Help Discussions

Write discussion on Intro Finance Assignment Help
Your posts are moderated
Related Questions
Q. Explain the mechanism for dislocation in plastic deformation. Ans.  Stresses are acting on dislocation in a crystal that is known as stress field, due to these stress forc

copper and its alloys

what is the effect of temperature on pn junction diode of component

.What is MASM? Explain its features

Expertsmind.com brings you unique solution in electrical engineering -          A constellation is a region of the sky with well defined borders; familiar star pat

Mechanical pulverization method is applicable to brittle metals like antimony. Many varieties of mechanical pulverizers are in use; some of these have counter rotating plates or r


R-134a is compressed in an adiabatic compressor from saturated vapor at 100kPa to a final state at 1 MPa and 50 degrees Celcius. Before entering the compressor, the R-134a receive

Monolithic IC: The monolithic IC is constructed in basically the same manner as a "Bipolar Transistor", although the overall process requires a few additional steps because of

Trade-offs in Communications Designs Satellite and Deep Space Communications               - Power is expensive to generate in space and transmission distances are eno