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CT Computers, Inc. is considering whether to begin offering customers the option to have their old personal computers recycled when they purchase new systems. The recycling system would require CT to invest $600,000 in the grinders and magnets used in the recycling process. The company estimates that for each system it recycles, it would generate $1.50 in incremental revenues from the sale of scrap metal and plastics. The machinery has a 5 year useful life and will be depreciated using straight line depreciation toward a zero salvage value. CT estimates that in the 1st year of the recycling investment, it could recycle 100,000 PCs and that this number will grow by 25% per year over the remaining 4 year life of the recycling equipment. CT uses a 15% discount rate to analyze capital expenditures and pays taxes equal to 30%. What are the project cash flows? You can assume that the recycled PCs cost CT nothing. Calculate the NPV and IRR for the recycling investment opportunity. Is the investment a good one based on these cash flow estimates? Is the investment sill a good one if the Year 1 units recycled are only 75,000? Redo your analysis for a scenario in which CT incurs a cost of $0.20 per unit to dispose of the toxic elements from the recycled computers. What is your recommendation under these circumstances?
If the company's WACC is 10%, what is the NPV of the project with the highest IRR?
The FX rate for the yen was 142 yen per dollar at the time of purchase, but then rose to 171.8 yen by the time payment was made. What was the dealer's gain or loss on the change in rates?
drive-in donrsquos fast food restaurant sells the most delicious burgers in town at the most affordable price.
Suppose that the U.S. Congress imposes an increase in taxes. Under a floating exchange rate regime, carefully illustrate and explain the process that will generate a new goods market
Calculate the present value of $1,000 zero-coupon bond with 5 years to maturity if the required annual interest rate is 6% and what relationship do you observe between yield to maturity and the current market value?
An additional $2,000 of net working capital will be required throughout the life of the project. What is the project's net present value if the required rate of return is 12 percent?
How should environmental effects be considered when evaluating this, or any other project? How might these affects change your decision in Part b?
1.yesterday you bought a call option on egyptian pounds that expires on may 1.nbsp this afternoon there is an
Reflect on the key course objectives including the financial, legal, alternative health care models, reinforced by your knowledge of strategic planning and capital budgeting in preparing your response.
Net working capital will increase at a rate of $3,000,000 per year over the life of the project. Ridgewood has a 35 percent tax rate and a required rate of return of 9 percent. Use the NPV technique and IRR method to evaluate this project.
One of the characteristics of IPOs which puzzles experts is that they tend to be underpriced. What are the explanations for IPOs being underpriced?
Discuss and explain the four market structures of pure competition, pure monopoly, monopolistic competition, and oligopoly.
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