User Account

All Pages

What is the net present value of this investment opportunity

Assignment Help Accounting Basics
Reference no: EM131774557

Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo that will require the purchase of new mixing machinery. The machinery will cost $500,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $50,000 at the end of 10 years. The machinery will also need a $35,000 overhaul at the end of Year 5. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $110,000 per year for each of the 10 years. Axillar's discount rate is 15%.

Required:

Part A: What is the net present value of this investment opportunity?

Part B: Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo?

Reference no: EM131774557

Questions Cloud

Representative who sells to veterinarian clinics : You manage a pharmaceutical representative who sells to veterinarian clinics.
Disadvantages of eliminating the national debt : Currently, the U.S. national debt is over 20 trillion. Many people feel that the high level of debt is a very bad thing and that it should be paid off.
Identify internal and external threats to validity : What do threats to validity have to do with training evaluation? Identify internal and external threats to validity. Are internal and external threats similar?
Find the after-tax rates of return on all three securities : Shrieves' corporate tax is rate is 35%, and 70% of the dividends received are tax exempt. Find the after-tax rates of return on all three securities
What is the net present value of this investment opportunity : What is the net present value of this investment opportunity, should Axillar go ahead with the new conditioning shampoo
Explain the deficiencies in allison report as drafted : Optima does not wish to present a statement of cash flows for either year. Explain the deficiencies in Allison's report as drafted. (AICPA Adapted)
Cover the cost of the to upgrade at the current volume : If it turned out that change in margin was not sufficient to cover the cost of the to upgrade at the current volume,
Calculation for the present value of the principal : Compute the total price paid by simpson inc. for the bonds showing your calculation for the present value of the principal and the present value
How can the fed reduce a continuing inflation : How can the Fed reduce a continuing inflation? a) by increasing the money supply growth rate b) by decreasing the required reserve ratio.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd