Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
You bought a survey device at $720,000 at beginning of year 1. You expect to use it to generate an annual revenue of $400,000 for year 1 and increase at 5% per year. The operating expenses will be $ 165,000 for year 1 and increase at 3% per year. At end of year 3, you can sell the device for $310,000 and close the business. Assuming you will have an income tax rate of 30% every year and a capital gain tax rate of 15% at year 3 and you will take depreciation charge every year based on the MACRS schedule as follows: Year 1 20% Year 2 32% Year 3 19.2% Part 1 Assuming all cash investment and using a MARR of 16%, what is the Net Present Value of this 3-year business and what is the IRR? Show the results as formatted below: 1 2 3 Revenue Operating Expense EBITDA Depreciation Charge Taxable Income Tax @30% tax rate Net Income CFAT Also clearly show the calculations of each year’s Depreciation Charges, Cash Flow After Tax at Year 3 for selling of the device and calculations of the present value and IRR, separately. Part 2 Assuming you will obtain a bank loan of $450,000 at an interest rate of 6.5% per year. The loan requires interest payment only at end of each year and the loan principle is due at end of the 3rd year (like a bond arrangement). Everything else stays the same as Part 1. Re-calculate everything as you did in Part 1. Based on the result of Part 2 and an Incremental IRR analysis, make your recommendation as which way to go, Part 1 or Part 2, and explain how does financial leverage affect your decision in relation to the selection of this project?
The decision criterion in the net present value approach to capital budgeting is to accept the project if ______, and otherwise to reject the project.
Fitchminster Armored Car can purchase a new vehicle for $200,000 that will provide annual net cash flow over the next five years of $40,000, $45,000, $50,000, $55,000, $60,000. The salvage value of the vehicle will be $25,000. Assume that the vehicle..
What is the price of a share of stock if the beta is 2, its next dividend is projected to be $4, and its growth rate is expected to be a constant 5%, assuming the market return is 16% and the risk free rate is 6%?
Describe the type of role you would like to play in health care finance.
Novelty Gifts Inc. is experiencing some inventory control problems. The manager, Wanda LaRue, currently orders 10,000 units four times a year to handle the annual demand of 40,000 units. Each order costs $15 to process and each unit cost $1.50 to car..
If Boyd Corp. has sales of $2 million per year (all credit) and a collection period of 35 days, what is its average amount of accounts receivable outstanding?
What is the present value of this investment if 5 percent per year is the appropriate discount rate?
What is the expected effect of increasing horsepower on 0-60 time? - Interpret your estimated coefficient on WEIGHT.
Calculate the standard deviation of expected dollar returns for Ditto Copier Center given the following distribution of returns:
What must the beta of this stick be?
What is the market value and required return of this firm's stock before the repurchase transaction, according to M&M Proposition I?
Explains the importance of considering purchasing an asset as part of a portfolio and not as an independent act and provides an example.
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd