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XYZ Corporation is considering an expansion project. To date they have spent $65,000 investigating the viability of the project and have decided to proceed. The CEO of XYZ spent $20,000 last year on his business trip to New York where he discussed about the proposed new project with the board members. The company spent $50,000 on a marketing study before its current analysis regarding whether to accept or reject the project. The proposed project will cost $550,000. The project will be depreciated over a 3 year MACRS class life. XYX would use the 3-year MACRS method to depreciate the machine and equipment which are 33% 45%, 15% and 7%.
If the project is undertaken the company will need to increase its inventories by $45,000, and its accounts payable will rise by $10,000. The company will realize an additional $750,000 in sales over each of the next four years. The company's operating costs (not including depreciation) will increase by $540,000 a year. Both sales and the operating cost are expected to grow 4.5% annually during the life of the project. The company's tax rate is 35%. At t = 3, the project's economic life is complete, but it will have a salvage value (before-tax) of $55,000 after three years. The project's WACC is 10.5%. What is the project's net present value (NPV)? What is the IRR? Should the project be accepted? Why or why not?
What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Enron employees were heavily invested in Enron stock through their 401(k) plans. While firms frequently provide a match in the form of firm stock, employees are typically free to move the money to an optional investment.
Assume the following facts about a firm's financing in the next year. Calculate the weighted cost of the capital of this project.
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Posting Journal entries into a worksheet - Prepare the general journal entries or enter into a worksheet the transactions completed in February, 2001
The Employee Retirement Income Security Act of 1974 (ERISA) established which of the following..
According to PMBOK, a project charter is a formal agreement that ensures project stakeholders share a common understanding of why the project is being done, the time frame, deliverables, boundaries, and responsibilities.
Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm's FCF for the year?
Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?
Computation of hedging position with options and given that you hedge your position with options, create a probability distribution for U.S. dollars to be received in 90 days
Determine the affordable monthly mortgage payment, the affordable mortgage amount, and affordable home buy price for the following situation;
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