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![2 If pipeline scrapped after 15 years (Cash flow for 15 years): Calculation of Present value: Annual Cash flow ($ in million) Cash flow of previous year-5.5%) Present Value factor @ 12% [ 1/(1+0.12) A year ] Present Value ($ in million) [Annual Cash flow * Present value factor] Year 2.80 2.65 2.50 2.36 2.23 2.11 1.99 1.88 1.78 1.68 1.59 1.50 1.42 1.34 1.27 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.2875 0.2567 0.2292 0.2046 0.1827 2.50 2.11 1.78 1.50 1.27 1.07 0.90 0.76 0.64 0.54 0.46 0.39 0.33 0.27 0.23 4 9 10 12 13 14 15 Present Value of Cash Flow 14.75 Million](http://img.homeworklib.com/questions/177c65b0-7292-11ea-9ada-d7f9f6e8fc67.png?x-oss-process=image/resize,w_560)
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0.00 points genrane a S2 8 milion cash resm over the coing year. The peine scperatrg...
You own an oll plpeline that wll generate a $2.8 million cash return over the coming...
You own an oll plpeline that wll generate a $2.8 million cash return over the coming year. The pipeline's operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oll shipped declining, and cash flows are expected to decline by 5.5% per year. The discount rate is 12% a. What is the PV of the pipeline's cash flows if its cash flows are assumed to last forever? (Do not round intermediate...
You own an oil pipeline that will generate a $2 million cash return over the coming...
You own an oil pipeline that will generate a $2 million cash return over the coming year. The pipelines operating costs are negligible, It is expected to last for a very long time. Unfortunately the volume of oil ship is declining and cash flows are expected to decline by 4% per year. The discount rate is 10%. What is the PV of the pipelines cash flows if its cash flows are assumed to last for ever? don round intermediate calculations....
New Millenium Company earned $2.5 milion in net income last year. It took depreciation deductions of...
New Millenium Company earned $2.5 milion in net income last year. It took depreciation deductions of $300,000 and made new investments in working capital and fixed assets of $100.000 and $350,000, respectively. a. What was New Millenium's free cash flow last year? b. Suppose that the company's free cash flow is expected to grow at 5% per year forever. If investors require a return of 8% on Millenium stock, what is the present value of Millenium's future free cash flows?...
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manuf...
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,700,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $270,000. She estimates that the return from owning her own shop will be $52,500 per year. She...
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows....
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,250,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $280,000. She estimates that the return from owning her own shop will be $40,000 per year. She...
DeBarry Corporation makes an investment of $57,000 that yields the following cash flows: Year Cash Flow...
DeBarry Corporation makes an investment of $57,000 that yields the following cash flows: Year Cash Flow 1 $18,000 2 18,000 3 24,000 4 26,000 5 28,000 a. What is the present value with a 7 percent discount rate (cost of capital)? (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Net present value $ b. What is the IRR? (Do not round intermediate calculations. Round...
a. The cost of a new automobile is $11,900 lf he interest rate is 4%, how...
a. The cost of a new automobile is $11,900 lf he interest rate is 4%, how much would you have to set aside now to provide this sum in four years? Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b, You have to pay $15,000 a year in school fees at the end of each of the next five years. If the Interest rate is 7%, how much do you need to set aside...
Need help with part b. Thank you, Problem 6-8 Equivalent annual cash flows Machines A and...
Need help with part b. Thank
you,
Problem 6-8 Equivalent annual cash flows Machines A and B are mutually exclusive and are expected to produce the following real cash flows Cash Flows ($ thousands) C -118 -72 Machine +128 +106 +100 +72 +78 The real opportunity cost of capital is 9% a. Calculate the NPV of each machine. (Do not round intermediate calculations. Enter your answers in dollars not in thousands, e.g 123,456. Round your answers to the nearest whole...
Expansion versus replacement cash flows Tesla Systems has estimated the cash flows over the 5-year lives...
Expansion versus replacement cash flows Tesla Systems has estimated the cash flows over the 5-year lives for two projects A and B. These cash flows are summarized in the following table. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Project A Project B Initial investment - $4,652,000 $1,542,000 Year Operating cash flows $558,000 $376,000 2 934 000 376,000 3 1,344 000 376,000 4 2.221.000 376,000 5 3,396.000 376,000 "After-tax...
Consider the following cash flows: Year points o-NM Cash Flow 19,400 10,400 9,320 6,900 ( 8...
Consider the following cash flows: Year points o-NM Cash Flow 19,400 10,400 9,320 6,900 ( 8 00:23:43 eBook a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount...
You own an oll plpeline that wll generate a $2.8 million cash return over the coming year. The pipeline's operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oll shipped declining, and cash flows are expected to decline by 5.5% per year. The discount rate is 12% a. What is the PV of the pipeline's cash flows if its cash flows are assumed to last forever? (Do not round intermediate...
New Millenium Company earned $2.5 milion in net income last year. It took depreciation deductions of $300,000 and made new investments in working capital and fixed assets of $100.000 and $350,000, respectively. a. What was New Millenium's free cash flow last year? b. Suppose that the company's free cash flow is expected to grow at 5% per year forever. If investors require a return of 8% on Millenium stock, what is the present value of Millenium's future free cash flows?...
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,700,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $270,000. She estimates that the return from owning her own shop will be $52,500 per year. She...
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,250,000 and will last 10 years. b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $280,000. She estimates that the return from owning her own shop will be $40,000 per year. She...
a. The cost of a new automobile is $11,900 lf he interest rate is 4%, how much would you have to set aside now to provide this sum in four years? Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b, You have to pay $15,000 a year in school fees at the end of each of the next five years. If the Interest rate is 7%, how much do you need to set aside...
Need help with part b. Thank
you,
Problem 6-8 Equivalent annual cash flows Machines A and B are mutually exclusive and are expected to produce the following real cash flows Cash Flows ($ thousands) C -118 -72 Machine +128 +106 +100 +72 +78 The real opportunity cost of capital is 9% a. Calculate the NPV of each machine. (Do not round intermediate calculations. Enter your answers in dollars not in thousands, e.g 123,456. Round your answers to the nearest whole...
Expansion versus replacement cash flows Tesla Systems has estimated the cash flows over the 5-year lives for two projects A and B. These cash flows are summarized in the following table. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Project A Project B Initial investment - $4,652,000 $1,542,000 Year Operating cash flows $558,000 $376,000 2 934 000 376,000 3 1,344 000 376,000 4 2.221.000 376,000 5 3,396.000 376,000 "After-tax...
Consider the following cash flows: Year points o-NM Cash Flow 19,400 10,400 9,320 6,900 ( 8 00:23:43 eBook a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount...
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