Calculate nal should company buy or lease equipment

Assignment Help Financial Management

Reference no: EM131906434

Marcel Corporation is considering a silver mining project would cost $50 million today and generate positive cash flows of $15 million a year at the end of each of the next 5 years. The project's cost of capital is 10%.

a. Calculate the project's NPV if the company proceeds now.

b. The company is fairly confident about its cash flow forecast, but expects to have better price information in 2 years. The company believes the cost will be $55 million in 2 years. It estimates there is a 90% change CFs will be $16 million for 5 years and a 10% change CFs will be $12 million for 5 years. Should the company proceed with the project now or wait 2 years until it has better information?

c. Calculate NAL. Should the company buy or lease the equipment? Why?

Reference no: EM131906434

Questions Cloud

Discuss about the software and website evaluation : Describing how you would evaluate it for quality, educational value, key features for learning, access and appeal for young learners.

Calculate the project internal rate of return : Calculate the project's internal rate of return. Calculate the project's net present value. What is the annual operating cash flow, OCF, from this project?

What is the formula of the compound : A sample of an unknown compound was analyzed and was found to contain 0.267 moles of tin and 1.068 moles of chlorine. What is the formula of the compound?

What was the change in the heat of system : In a system where ?E = -51.0 kJ, a piston expanded against a Pext of 1.2 atm gives a change in volume of 32.0 L. What was the change in the heat of this system?

Calculate nal should company buy or lease equipment : Calculate the project's NPV if the company proceeds now. Calculate NAL. Should the company buy or lease the equipment? Why?

Explain the entire economic evaluation process : You have decided to develop a PowerPoint presentation explaining the entire economic evaluation process.

Calculate the molar solubility : Calculate the molar solubility of SrF2 in the following substances.

Calculate the cost of purchasing the equipment with debt : Calculate the cost of purchasing the equipment with debt. Calculate the cost of leasing the equipment.

What is the pressure of the gas mixture : Two liters of oxygen at 25 degree Celsius and a pressure of 2.3 atm is added to a 3.0 L flask containing nitrogen with a pressure of 3.5 atm at 25 degree.

User Account

All Pages