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New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,130,000, and it would cost another $22,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $695,000. The machine would require an increase in net working capital (inventory) of $17,000. The sprayer would not change revenues, but it is expected to save the firm $380,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%. What is the Year-0 net cash flow? $ What are the net operating cash flows in Years 1, 2, and 3? Round your answers to the nearest dollar. Year 1 $ Year 2 $ Year 3 $ What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)? Round your answer to the nearest dollar. $ If the project's cost of capital is 11 %, what is the NPV of the project? Round your answer to the nearest dollar. $ Should the machine be purchased?
Essary Enterprises has bonds on the market making annual payments, with eleven years to maturity, a par value of $1,000, and selling for $982. At this price, the bonds yield 7.6 percent. What must the coupon rate be on the bonds?
An annuity with a cash value of 13500 earns 6% compounded semi-annually. End-of-period semi-annual payments are deffered for five years, and then continue for ten years. How much is the amount of each payment?
this section provides the opportunity to develop your course project. conducting an internal environmental scan or
Default Risk Premium A company's 5-year bonds are yielding 8.5% per year. Treasury bonds with the same maturity are yielding 6.4% per year, and the real risk-free rate (r*) is 2.75%. The average inflation premium is 3.25%, and the maturity risk premi..
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.25 coming 3 years from today. what is..
Which of the following are argued to be distinctive characteristics of the corporation?
question 11.using the diagram belowlsquobuilding blocks of financial management explain the three most important
There has been a new surge of mergers and acquisitions (M and A) in the last several years. Why is this? In the past, why have so many not been successful? In your opinion, what are the most important factors to be taken into account for a successful..
Earnings per common share of ABC industires for the current year are expected to be $3 and to grow 10% per year for the next 4 years. At the end of the 5 years, earnings growth rate is expected to fall to 5% and continue at that rate for the foreseea..
Value of a stock is currently at $40. Volatility of that stock is 30% per year and risk- free interest rate with continuous compounding is at 2.5% per year. Find the value of a 6-month call and a 6-month put option using a two-step binomial model. Bo..
ABC Waterhouse's free cash flow next year will be $250 million and it is widely expected to grow at a 5 percent annual rate indefinitely. The company's weighted average cost of capital is 11 percent, the market value of its liabilities is $2.5 billio..
Cost of project= $5,676.10 WACC= 11% Year 1 cash inflow $1000 year 2 cash inflow $1500 year 3 cash inflow $2000 year 4 cash inflow $3000 year 5 cash inflow $1600 Calculate the modified internal rate of return for this project.
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