Reference no: EM131223632
Frisco Enterprises is considering the purchase of a new software management system. The system is called FK1. The FK1 will drastically reduce the amount of time the Frisco Enterprises employees installing new software. The employees currently spend 6,000 hours per year on installations.
The average rate per employee on the installation is $25 per hour. There is a claim that the FK1 will reduce the installation of software by 25%. The FK1 requires an initial investment of $55,000 and an additional investment of $10,000 for training the employees who installs the software.
In addition there is an additional cost of $15,000 per year for upgrades. The tax treatment of the software requires amortization of the initial cost of the software (FK1). At times the cost can be expensed during the year of purchase. Frisco Enterprise has determined that it will expense the cost of the FK1 in the year of the expenditure.
The current tax rate is 30%. There is a 9% cost of capital to evaluate projects of this type.
(Assume that Frisco Enterprises has sufficient taxable income from other projects so that it can expense the software immediately). Your answer must be computed utilizing Excel.
Requirement:
(a) What are the free cash flows for the project for years 1 through 5? (The free cash flow is the same for each year 1 to 5) Therefore only one numeric answer is required.
(b) What is Net Present Value?
(c) What is Internal Rate of Return?
What is the yield to maturity
: What is the yield to maturity?- What is the current yield? - what is the maximum price that you should be willing to pay for this bond?
|
Calculate depreciation expense for each asset
: Calculate depreciation expense for each asset using depreciation method specified in column G - Calculates the straight-line depreciation allowance of an asset with an initial cost, an expected useful life
|
External financing needed
: The most recent financial statements for Hornick, Inc., are shown here (assuming no income taxes): Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $10,788. What is the ..
|
Discuss any ethical grey areas in the given scenario
: In this scenario, to what extent do you think allowing the crew into the trench without a trench box would be pushing (or exceeding) the limit? Discuss any ethical grey areas in this scenario? What in your mind is the right thing to do?
|
Considering the purchase of new software management system
: Frisco Enterprises is considering the purchase of a new software management system. The system is called FK1. The FK1 will drastically reduce the amount of time the Frisco Enterprises employees installing new software. What are the free cash flows fo..
|
Current generation matures
: Suppose that as the current generation matures, a nation's population of young adults has more men than women by a ratio of 115 to 100. With 275 million young adults in this nation, how many men would be unable to find a spouse?
|
Perimeter of the rectangle
: The width of a rectangle is 3 more than half the length. If the perimeter of the rectangle is 193 meters, find an equation that shows this relationship and then solve it to find the length and width.
|
Create a presentation using the sample presentation
: Create a presentation from the point of view of two specific professionals who are experts - Consider the psychological career alternatives available and determine from which fields of expertise your two points of view will come.
|
Expectations for successful completion
: This assignment uses a scoring guide. Review the scoring guide prior to beginning the assignment to become familiar with the expectations for successful completion.
|