Considering new equipment for their factory in milan

Assignment Help Financial Management
Reference no: EM132014766

Ronaldinho Manufacturing Company is considering a new equipment for their factory in Milan. The equipment costs $500,000 today and it will depreciate on a straight-line basis over five years. In addition, the company's inventory will increase by $85,000 and accounts payable will rise by $40,000. All other operating working capital components will stay the same. The change in net working capital will be recovered at the end of the third year at which time the company sells the equipment at an expected market value of $200,000. Dr. Alba, the financial manager of the company, has estimated that the equipment will generate revenues of $1,000,000 in year 1, $1,200,000 in year 2, and $1,500,000 in year 3. Dr. Alba has also estimated the operating costs, excluding depreciation, to be equal to 75 percent of revenue of each year.

The project's cost of capital is 15 percent and the company's tax rate is 40 percent.

What is NPV and MIRR of the project?

Reference no: EM132014766

Questions Cloud

Determine bond polarities and the net dipoles in a molecule : Using electronegativity values, determine bond polarities and the net dipoles in a molecule of HCN and indicate if the molecule will be polar.
Intermolecular forces between the two fatty acids : Explain the difference in melting points by referring to the structure and the available intermolecular forces between the two fatty acids.
Prepare a topical outline that addresses the given elements : Working in groups of three or four students, prepare a topical outline that addresses the following elements: 1. Description of the organization.
What is whitman symbolizing about the nature of teaching : What is Whitman symbolizing about the nature of teaching and learning versus the act of discovery on one's own in a thriving act of observing the world?
Considering new equipment for their factory in milan : Ronaldinho Manufacturing Company is considering a new equipment for their factory in Milan.
Investigate at least two value-added services : Investigate at least two (2) value-added services that Caring Angel Hospital could offer to strengthen its value proposition.
Discuss the health belief model in detail : Compare and contrast the health belief model, the protection motivation theory, and the expanded parallel process mode. (A MINIMUM OF 250 WORDS)
Why do you think the younger waiter seems to mistreat man : Why do you think the younger waiter seems to mistreat the old man, and why does that customer choose to visit a well-lit cafe, then sit in the shadows?
Differentiate between the starting alcohol and the ester : Which 2 signals in the IR spectra can be used to differentiate between the starting alcohol and the ester product? Give specific bonds and wavenumbers!

Reviews

Write a Review

 

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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