Project has an initial fixed asset investment

Assignment Help Financial Management
Reference no: EM131055029

A five-year project has an initial fixed asset investment of $290,000, an initial NWC investment of $26,000, and an annual OCF of −$25,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project’s equivalent annual cost, or EAC? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131055029

Questions Cloud

Calculate the approximate ph of a bleach solution : Use this information to calculate the approximate pH of a bleach solution, assuming no other solutes are in the solution except NaOCl. (Assume the bleach has a density of 1.0 g/mL.)
Common-size statement value of interest expense : On its most recent annual financial statements, Wilmington Casket Company reported total assets of $750,000, total equity of $519,000, sales of $475,000, net income of $98,000 and interest expense of $12,400. What is the common-size statement value o..
Decline of the alaska king crab fishery : a. How would an economist explain the decline of the Alaska king crab fishery? b. Explain two programs you could institute to protect the fishery and still allow some crabbing again.
Country production possibility curve : All other things unchanged, which of the following events leads to a shift further outward in the country's production possibility curve?
Project has an initial fixed asset investment : A five-year project has an initial fixed asset investment of $290,000, an initial NWC investment of $26,000, and an annual OCF of −$25,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
What concentration ofzn2+(aq) remains : A solution is made that is 1.2×10-3M inZn(NO3)2 and 0.170M inNH3.After the solution reaches equilibrium, what concentration ofZn2+(aq) remains?
Optimal pricing for an aggregate demand curve : The table below shows the hypothetical prices and quantities demanded of a software product. Assume that the fixed cost of setting up the production of software is $200 and the marginal cost is $5.
What is the discounted payback period for cash flows : An investment project has annual cash inflows of $4,500, $3,800, $5,000, and $4,200, for the next four years, respectively. The discount rate is 15 percent. What is the discounted payback period for these cash flows if the initial cost is $5,600?
Brief explanation of the roles of the artist : Write a 300- to 350-word essay summarizing artist roles as applied to your artwork - A brief explanation of the roles of the artist

Reviews

Write a Review

Financial Management Questions & Answers

  Variety of performance data for individuals and teams

Predicting Winning Percentage for the NFL The National Football League (NFL) records a variety of performance data for individuals and teams (NFL website). Some of the year-end performance data for the 2005 season appear in the file named NFLStats.

  Net annual savings be if the service were adopted

Your firm has an average receipt size of $120. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 7,400 checks per day. The daily interest rate is .017 percent. What..

  Would it be the availability of credit

What is tipping theory? how would you apply it to any part of our economy? Most important, where does it start? For instance, if you apply the theory to the auto industry, then what would tip new car purchases? Would it be the availability of credit?..

  Using both capm and the constant-growth model

You have assigned the following values to these three firms: Price Upcoming Dividend Growth Beta US Bancorp $ 39.30 $ 1.90 7.20 % 1.76 Praxair 35.55 1.65 13.00 3.14 Eastman Kodak 38.10 2.00 5.50 1.19 Assume that the market portfolio will earn 15.20 p..

  Bond pays interest semiannually

ElVonn, Inc., a decorative firsm issued a $1,000 bond with a coupon rate of 8 percent and 20 years to maturity five years ago. If this bond pays interest semiannually, what is the value of this bond (today) to an investor who requires an 8 percent ra..

  Federal-plus-state income tax rate

The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's taxable income, or earnings before..

  Theories of capital structure the cost of equity rises

In each of the theories of capital structure the cost of equity rises as the amount of debt increases. So why don't financial managers use as little debt as possible to keep the cost of equity down? After all, isn't the goal of the firm to maximize s..

  Assume interest payments are semi-annual

Compute the price of a 5.4 percent coupon bond with 10 years left to maturity and a market interest rate of 8.6 percent.

  What is the equipment''s after-tax net salvage value

Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated. The used equipment can be sold today for $4 million, and its tax rate is 40%. What is the equipment's ..

  What is the projects net present value

East Coast Television is considering a project with an initial outlay of $X (you will have to determine this amount). It is expected that the project will produce a positive cash flow of $44,000 a year at the end of each year for the next 13 years. T..

  ART has come out with a new and improved product

ART has come out with a new and improved product. As a result, the firm projects an ROE of 30%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3.0 per share. Investors expect a 16% rate of return on the stock. What pri..

  How do you determine if the company has too much liquidity

Defines how solvency and liquidity differ and provides an example of two companies. As a financial manager, what can you do to make sure your company stays solvent and is not too liquid?

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