Requires purchases of capital assets

Assignment Help Financial Management
Reference no: EM131623686

You are the Project Manager for a project that requires purchases of capital assets costing $1,050,000. The project will incur $21,000 of additional upfront costs for equipment installation. You estimate the project will generate $318,500 in annual operating cash flows for each of the next 5 years. The project will be complete at the end of 5 years and the assets will have a salvage value of $15,000. The assets are classified as 5-year assets for MACRS purposes. The tax rate is 35% and the asset cost of capital is 15%. a. create a table showing the cash flows for each year of the project b. what is the next present value of the project? c. as Project Manager, based on the project's net present value, should you accept the project? Why? *Work must be shown using Excel formula(s) & function(s).

Reference no: EM131623686

Questions Cloud

How many shares of stock will be outstanding : How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?
What will the market price of the stock be : If investors require a 16% return and the growth rate in dividends is expected to be 8%, what will the market price of the stock be?
Calculate the net daily advantage of the system : If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system.
What is the expected profit of granting credit : What is the expected profit of granting credit?
Requires purchases of capital assets : You are the Project Manager for a project that requires purchases of capital assets costing $1,050,000. what is the next present value of the project?
Calculate the amount of the firm gross profit : Calculate the amount of the firm’s gross profit.
Interest rate parity in calculating the expected spot rates : Lakonishok Equipment has an investment opportunity in Europe. Use the exact form of interest rate parity in calculating the expected spot rates.
What is the amount of the firm ebit : Advantage First Corporation has sales of $4,981,730; What is the amount of the firm’s EBIT?
Changes in working capital are negligible and capex : assume that changes in working capital are negligible and capex and depreciation are of the same magnitude and therefore cancel each other.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the nature and function of insurance

What is the nature and function of Insurance.

  Annual cash flow is projected

We are examining a new project. We expect to sell 6,000 units per year at $74 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $74 × 6,000 = $444,000. The relevant discount rate is 18 percent, and th..

  Since investing in stocks and bonds is also saving money

Since investing in stocks and bonds is also saving money, it's obvious that savings equals investment!

  What is the beta of your portfolio

You own 400 shares of Stock A at a price of $50 per share, 290 shares of Stock B at $75 per share, and 700 shares of Stock C at $27 per share. The betas for the stocks are .6, 1.2, and .5, respectively. What is the beta of your portfolio?

  Annual percentage change between last three reported years

Compute the annual percentage change between the last three reported years for the following for total Revenue and net Income applicable to common shares.

  What is the payment to the floater class if the index rate

Given a floater/inverse floater class with $10,000,000 principal and even allotments to the floater and inverse floater class , and a pool of 4% FRMs with annual payments, what is the payment to the floater class if the index rate increases to 9% in ..

  Liability insurance states

An example of a non-insurance transfer is. Liability insurance states that

  Expected return-standard deviation diagram

You are the portfolio manager for a mutual fund. Your fund has an expected return of 15% with a standard deviation of 24% and the T-bill rate is 3%. Your client chooses to invest 60% of her retirement pension in your fund and the remaining 40% in T-b..

  What will the price be in six years and in thirteen years

Gilmore, Inc., just paid a dividend of $2.70 per share on its stock. The dividends are expected to grow at a constant rate of 4.5 percent per year, indefinitely. Assume investors require a return of 9 percent on this stock. What will the price be in ..

  What must the coupon rate be on mertons bonds

Merton Enterprises has bonds on the market making annual payments, with 15 years to maturity, and selling for $971. At this price, the bonds yield 8.3 percent. What must the coupon rate be on Merton’s bonds?

  A holder of a negotiable instrument

A holder of a negotiable instrument is: Stanley, who owes Milton money, indorses a check to him with the term "without recourse." The instrument later is dishonored. What liability does Stanley have on the instrument? Chris convinces Dion, who does n..

  What is your expected one-year holding-period return

What is the intrinsic value of a share of Xyrong stock? What is your expected one-year holding-period return on Xyrong stock?

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