Assisting with internal heating and cooling cost reduction

Assignment Help Financial Management

Reference no: EM131088060

Morris Glass Company has decided to invest funds for the next 5 years so that development of “smart” glass is well funded in the future. This type of new-technology glass uses electrochrome coating to allow rapid adjustment to sun and dark in building glass, as well as assisting with internal heating and cooling cost reduction. The fi nancial plan is to invest first, allow appreciation to occur, and then use the available funds in the future. All cash flow estimates are in $1000 units, and the interest rate expectation is 9% per year. • Years 1 through 5: Invest $7000 in year 1, decreasing by $1000 per year through • year 5 Years 6 through 10: No new investment and no withdrawals. • Years 11 through 15: Withdraw $20,000 in year 11, decreasing 20% per year through year 15. Determine if the anticipated withdrawals will be covered by the investment and appreciation plans. If the withdrawal series is over- or underfunded, what is the exact amount available in year 11, provided all other estimates remain the same?

Please read the questions carefully. Please draw the cash flow diagrams and explain the steps that you are going to approach to solve the problems then solve the problem. Show the details in solving the problems.

Use equation for example; P= A (P/A,i,n) + G(P/G,i,n), do not use other equations or exel to solve it.

Reference no: EM131088060

Questions Cloud

Financial analysts estimate of wccs stock price : WCC has EBITDA of $4.2 million. A financial analyst feels that an appropriate EV/EBITDA ratio for WCC is 8.4. WCC has $4.5 million in debt, $1.2 million in cash and 640,000 shares outstanding. What is the financial analyst’s estimate of WCC’s stock p..

What are the cash flows in year one : What are the cash flows in year 1? What is the NPV of this project? What if sales are 10% higher than expected?

When the overhaul expense is included in the calculation : Consider the following proposed plant. The initial cost is $208 mm; however, ten (10) years after initiation, there will be a need for a major, one time only, overhaul which will cost $20 mm. If the ten (10) year overhaul is considered an extra expen..

What is the standard deviation of portfolio : John’s portfolio consists of $1000 in XYZ stock and $4000 in ABC. Historically XYZ has had an average return of 16% annually with a standard deviation of 30%. Historically ABC has an average return of 24% annually with a standard deviation of 40%. Wh..

Assisting with internal heating and cooling cost reduction : Morris Glass Company has decided to invest funds for the next 5 years so that development of “smart” glass is well funded in the future. This type of new-technology glass uses electrochrome coating to allow rapid adjustment to sun and dark in buildin..

What is the upper limit of their cash balance : The Cynster Corp. requires that their cash balance never dip below $100. The standard deviation of their monthly net cash flows is $200. The interest rate is 1% per month. The fixed transaction cost is $10. What is the optimal cash balance? What is t..

What discount rate should the firm use for the project : Gnomes R Us is considering a new project. The company has a debt-equity ratio of .82. The company’s cost of equity is 14.7 percent, and the aftertax cost of debt is 8 percent. What is the company’s WACC? What discount rate should the firm use for the..

What would be the expected return and beta of portfolios : Suppose that the S&P 500, with a beta of 1, has an expected return of 9% and T-bills provide a risk-free return of 5%. a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (i) 0;..

Calculate the after-tax cash flow at disposal : Bryers purchases an asset for $15826. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Br..

User Account

All Pages