Calculating project npv, Finance Basics

Assignment Help:

2.Calculating Project NPV-The Best Manufacturing Company is considering a new investment.

Financial projections for the investment are tabulated here. The corporation tax rate is 34 percent.

Assume all sales revenue is received in cash,all operating costs and income taxes are paid in

cash,allcash flows occur at the end of the year All net working capital is recovered at the project.

 

Year0

 

Year1

 

Investment $16,000

]Sales REvenue

 

Operating costs

 

Depreciation

4,000 4,000

4,000

4,000

Net working capital

spending

200

250

300

200

?

a.Compute the incremental net income of the investment for each year

b. compute et iincremental cash flows of the investment for each nyear.

c.Suppose the appropriate discount rate is 12 percent What is the NPV of th project?

 

3,Calculating Project NPV Down Under Boomerang INC>< is considering a three year expansion

project that requires an intial fixed assestment of 2.4 million. THe fixed asset investment of 2.4

million.The fixed asset will be depreciated straight-line to zero over its three year tax life after which

it will be worthless. The project is estimated to generate $2,050,000 in annual sales,with costs of

$950,000. THE TAX RATE IS 35 PERCENT AND the required return rate is 12 perc ent. What is

the project NPV?

 

4. Calculating Project Cash flow from Assets In the previous problem,suppose the project requires an

intial investment in net working capital of $285,000AND THE FIXED asset will have a market value

of $225,000at the end of the project?What is the project yearyear 0 net cash flow? Year1 year2 year 3

what is new NPV?

 

$ 8,500

 

1,900


Related Discussions:- Calculating project npv

Determine the required rate of return on the security, Elephant Company com...

Elephant Company common stock has a beta of 1.2. The risk-free rate is 6% and the expected market rate of return is 12%. Determine the required rate of return on the security.

Basic eoq model, Basic EOQ Model The basic inventory decision model is...

Basic EOQ Model The basic inventory decision model is Economic Order Quantity or called EOQ model. This model is specified via the following equation as: Whereas:Q is

Overdraft finance, Overdraft Finance This finance is perfect to need a...

Overdraft Finance This finance is perfect to need as bridging finance in sense such should be required to solve the company's short term liquidity problems in specific those o

Dividend yield or gordon''s model, Dividend yield or Gordon's Model Th...

Dividend yield or Gordon's Model This model is used to determine the cost of various capital components in particular: Cost of equity - K e Cost of preferenc

Explain the different life insurance products, Question: Company XYZ cu...

Question: Company XYZ currently operates a General Insurance company and would like to start selling life insurance products. The intended market is composed of both financial

Example of valuation of bonds and debentures, Example of Valuation of Bonds...

Example of Valuation of Bonds and Debentures K is contemplating purchasing a 3 year bond worth 40,000/= carrying a nominal coupon rate of interest of 10 percent.  K necessary

Required Return.., Valuing Preferred Stock Gest, Inc has an issue of prefer...

Valuing Preferred Stock Gest, Inc has an issue of preferred stock outstanding that pays a $4.50 dividend every year in perpetuity. If this issue currently sells for for $79.85 per

Debentures of middle asia, Debentures of Middle Asia Reasons behind Un...

Debentures of Middle Asia Reasons behind Unpopularity of Debentures of middle Asia's Financial Market as: i)Their par price is an extremely high value and as such they are

Explain mechanics of security trading in stock exchange, Explain Mechanics ...

Explain Mechanics of security trading in Stock Exchange Introduction: An investor should have some knowledge of how the securities markets operate. Marketing of old or new se

Preference shares, what makes a preference shares a hybrid?

what makes a preference shares a hybrid?

Write Your Message!

Captcha
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