Reference no: EM131016819
Upload an Excel spreadsheet that shows all your work with step-by-step explanations. Make sure your final answers are clearly identified. The spreadsheet should be a PROGRAM, which links inputs and outputs. If the inputs change, the spreadsheet should automatically compute the outputs. Use the information for Green Wheel, Inc. to answer the following questions. The Green Wheel Inc., a company that produces alternative energy vehicles is considering an expansion of their product line to Taiwan. The expansion would require a purchase of equipment with a price of $4,500,000 and additional installation of $500,000 (assume that the installation costs cannot be expensed, but rather, must be depreciated over the life of the asset). Because this would be a new product, they will not be replacing existing equipment. The new product line is expected to increase revenues by Taiwan dollar (TWD) 60,000,000 per year over current levels for the next 5 years, however, expenses will also increase by TWD 25,000,000 per year. (Note: Assume the after-tax operating cash flows in years 1-5 are equal, and that the terminal value of the project in year 5 may change total after-tax cash flows for that year.) The equipment is multipurpose and the firm anticipates that they will sell it at the end of the five years for TWD 50,000,000. The firm's required rate of return is 12% and they are in the 20% tax bracket. Depreciation is straight-line to a value of 0 over the 5-year life of the equipment, and the project also expects an increase in NWC of TWD 5,000,000 per year for the next 5 years (to be recovered at the sale of the equipment at the end of five years). The current spot rate is TWD30/$, and the expected inflation rate in the U.S. is 4% per year and 3% per year in Taiwan.
1. What are the EBIT for the Green Wheel project?
2. What are the free cash flows for the Green Wheel project?
3. What is the initial investment for the Green Wheel project?
4. What is the NPV and IRR of the Taiwanese expansion from the project viewpoint?
5. What are the forecasts of future exchange rates using the purchasing power parity?
6. If all the free cash flows are remitted to the parent, what is the NPV and IRR of the Taiwanese expansion from the parent viewpoint?
7. The Green Wheel Inc. ask you for advise on the investment. What is your recommendation? Explain your recommendation.
Name the current president of the united states of america
: Name the current president of the united states of america
|
What tensile force does the cable have to support
: The tank rests on a smooth surface, and to prevent it from sliding, a horizontal flexible cable is to be connected to hooks on either the right or left side of the tank. Assuming the cable can only support a tensile force, would you connect it to ..
|
What was the communication style of the meeting
: Was the meeting opened with an announcement or explanation of its purpose and importance? What was the communication style of the meeting's leader or facilitator? What were the leader's bases of power? Select from a number of conceptual paradigms and..
|
Determine the velocity at the exit v1
: Air flows into the atmosphere from a nozzle and strikes a vertical plate as shown in Fig. A horizontal force of 9 N is required to hold the plate in place. Determine the velocity at the exit, V1, and the velocity within the pipe, V2.
|
Ebit for the green wheel project
: 1. What are the EBIT for the Green Wheel project? 2. What are the free cash flows for the Green Wheel project? 3. What is the initial investment for the Green Wheel project?
|
Explain why you use the same adjustment factor
: Explain why you use the same adjustment factor, (1 + i), when you adjust annuity due payments for both future value and present value.
|
Balance sheet and statement of retained earnings
: Financial accounting - Accounting equation, Preparation of Income Statement, Balance Sheet and Statement of Retained earnings of PS Music Co.
|
Determine the average velocity through each of the three
: Water flows into a sink as shown in Fig. at a rate of 2 gallons per minute. Determine the average velocity through each of the three 0.4-in.-diameter overflow holes if the drain is closed and the water level in the sink remains constant.
|
Calculate the initial capital
: The final capital for Paul's business for the year ended 30th June 2005 was $90, 000. During the trading period he made a loss of $5000 and the additional investment of $46, 000 and drawings of $5, 100. Calculate the initial capital.
|