Calculation of npv of blackwater plc, Financial Management

Assignment Help:

BLACKWATER PLC

(a) Calculation of NPV

EV = (0.3 × 0.50) + (0.5 × 1.40) + (0.2 × 2.0)

   = 0.15 + 0.70 + 0.40 = 1.25 (i.e.) $ 1.25m

To conclude the NPV of the project Blackwater must weigh the present value of the costs incurred that is the outlay and the increased production costs against the benefits in the form of the two sets of tax reliefs relating to the increased operating costs and to the writing-down allowance and also the present value of the fines avoided. These are put out in the following table.

2013_BLACKWATER PLC.png

Since the negative NPV surpass the expected present value of the fines ($1~250m) over the same period it appears that the project is not viable in financial terms (that is ) it is cheaper to risk the fines.


Related Discussions:- Calculation of npv of blackwater plc

Protected put, Protected Put A protected put would involve a long put a...

Protected Put A protected put would involve a long put and a long stock. For example - ONGC. Underlying stock = Rs. 809 Buy Mar Rs. 900 Put @ Rs.68.8   Total cos

What is cost recovery method, Q. What is Cost Recovery Method? Cost Rec...

Q. What is Cost Recovery Method? Cost Recovery Method - METHOD OF REVENUE RECOGNITION that identifies profits after costs are entirely recovered. Normally used only when the to

Analyse the corporate governance issues facing x company, M has recently jo...

M has recently joined the board of X Company, a main listed confectionary manufacturer. The company was established as a family business over a century ago and members of the found

What typ, how would you judge the potential profit of bajaj electronics on ...

how would you judge the potential profit of bajaj electronics on the first year of sales to booth plastics and give your views to increase the profit ?

Explain transaction exposure, How would you explain transaction exposure? H...

How would you explain transaction exposure? How is it different from economic exposure? Answer:Transaction exposure is the sensitivity of comprehend domestic currency values of

What are the aspects of receivables management, Q. What are the Aspects of ...

Q. What are the Aspects of Receivables Management? Scope or else Aspects or Receivables Management: - Extent of receivables management is quite wide. It comprises the following

Show the disadvantages of adjusted discount rate, Q. Show the Disadvantages...

Q. Show the Disadvantages of adjusted discount rate? (1) The risk premium rates resolute under this method are arbitrary. Therefore this method mayn't give objective results.

Determine current cost of equity, Your task is to determine CDW's current c...

Your task is to determine CDW's current cost of equity. Since the company is not yet publicly traded , you need to estimate its cost of equity from a set of comparable companies. U

Passive management, In the efficient markets, whether it is sec...

In the efficient markets, whether it is security, equity or fixed-income markets it is believed that the investors use some type of passive strategy in

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