Homework Answers
| IRR | 7.54% |
| NPV | ($1,022,855.23) |
| Payback | 4.47 |
Workings
| The Annual operating cash flows are as below | ||||||
| OCF | SL | |||||
| Year | Cash flows | Depreciation | EBIT | Tax | PAT | OCF |
| 1 | 5000000 | 3200000 | 1800000 | 720000 | 1080000 | 4280000 |
| 2 | 5000000 | 3200000 | 1800000 | 720000 | 1080000 | 4280000 |
| 3 | 5000000 | 3200000 | 1800000 | 720000 | 1080000 | 4280000 |
| 4 | 5000000 | 3200000 | 1800000 | 720000 | 1080000 | 4280000 |
| 5 | 5000000 | 3200000 | 1800000 | 720000 | 1080000 | 4280000 |
| Salvage | |
| Purchase price | 19000000 |
| Less: Depreciation | 16000000 |
| Closing book value | 3000000 |
| Selling price | 5,000,000.00 |
| Gain/(loss) | 2000000 |
| Tax/ (Saving) | 800000 |
| Net salvage | 4200000 |
| Finally the Net cash flows | ||||||
| Year | Initial cash flow | OCF | Working capital | Salvage | Net cash flows | Cumulative CF |
| 0 | -19000000 | -4000000 | -23000000 | -23000000 | ||
| 1 | $4,280,000.00 | 4280000 | -18720000 | |||
| 2 | $4,280,000.00 | 4280000 | -14440000 | |||
| 3 | $4,280,000.00 | 4280000 | -10160000 | |||
| 4 | $4,280,000.00 | 4280000 | -5880000 | |||
| 5 | $4,280,000.00 | 4000000 | 4200000 | 12480000 | 6600000 | |
Add Answer to:
(73) Calculate the NPV, IRR, and Payback Period for the following information: A machine is purchased...
Calculate the NPV, IRR, and Payback Period for the following information: A machine is purchased for...
Calculate the NPV, IRR, and Payback Period for the following information: A machine is purchased for $12 million with $1 million modification cost and $1 million shipping cost. Net operating working capital of $3 million is needed. The machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 million. The machine has a 5 year life and will be depreciated using straight line depreciation. The salvage value of the machine for depreciation purposes...
what would NPV be? A machine is purchased for $12 million with $1 million modification cost...
what would NPV be?
A machine is purchased for $12 million with $1 million modification cost and $1 million shipping cost. Net operating working capital of $3 million is needed. The machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 million. The machine has a 5 year life and will be depreciated using straight line depreciation. The salvage value of the machine for depreciation purposes is $3 million. It is estimated the...
#6 machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 mi...
#6
machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 million. The machine has a 5 year life and will be depreciated using straight line depreciation. The salvage value of the machine for depreciation purposes is $3 million. It is estimated the machine can be sold after 5 years for $4 million (tax rate is 40%). The company WACC is 8%. (5) What is the MIRR given cash flows of: -300; -200;...
Calculate NPV & IRR using the following information: . Purchase Price: Estimated purchase price for the...
Calculate NPV & IRR using the following information: . Purchase Price: Estimated purchase price for the new equipment is $150 million. . Company’s Depreciation Policy: Depreciation using Straight-line method, the economic life is 5 years. - Equipment expected to have zero salvage value at the end of year 5. At that time the equipment will be obsolete and sold for scrap. . Cash Inflows: Project inflows are expected to be $65 million per year, beginning one year after installation...
1. Compute the payback period, the ARR, the NPV, and the approximate IRR of this investment....
1.
Compute the payback period, the ARR, the NPV, and the
approximate IRR of this investment. (If you use the tables to
compute the IRR, answer with the closest interest rate shown in
the tables.)
2.
Recommend whether the company should invest in this project.
Rapid Wave is considering purchasing a water park in Oakland, California, for $1,950,000. The new facility will generate annual net cash inflows of $500,000 for eight years. Engineers estimate that the facility will remain useful...
A.) Calculate the payback period for this project. B.) Calculate the NPV for this project. C.)...
A.) Calculate the payback period for this
project.
B.) Calculate the NPV for this project.
C.) Calculate the IRR for this project.
Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $140,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $855,000 per year. The fixed costs associated with this will be $212,000 per year, and variable...
Please show cash flows, NPV, IRR, and payback period Sneaker 2013 The business case team had...
Please show cash flows, NPV, IRR, and payback period
Sneaker 2013 The business case team had compiled the following baseline information surrounding the Sneaker 2013 project: 1. The life of the Sneaker 2013 project was expected to be six years. Assume the analysis took place at the end of 2012. 2. The suggested retail price of the shoe was $190. Gross margins for high-end athletic footwear averaged about 40% at the retail level, meaning each pair sold would net New...
Calexico Hospital plans to invest in a new MRI machine. The cost of the MRI is...
Calexico Hospital plans to invest in a new MRI machine. The cost of the MRI is $1.8 million. The MRI has an economic life of 5 years, and it will be depreciated over a five-year life to a $400,000 salvage value. Additional revenues attributed to the new MRI will be in the amount of $1.5 million per year for 5 years. Additional operating expenses, excluding depreciation expense, will amount to $1 million per year for 5 years. Over the life...
Assume Corbins ,Inc purchased an automated machine 5 years ago that had an estimated economic life of 10 years. The Automated Machines originally cost $300,000 and has been fully depreciated, leaving...
Assume Corbins ,Inc purchased an automated machine 5 years ago that had an estimated economic life of 10 years. The Automated Machines originally cost $300,000 and has been fully depreciated, leaving a current book value of $0. The actual market value of this drill press is $80,000. The company is considering replacing the automated machine with a new one costing $380,000. Shipping and installation charges will add an additional $10,000 to the cost. Corbins., Inc also has paid a sunk...
Saved Exercise 11-5 Payback period computation; even cash flows LO P1 Compute the payback period for...
Saved Exercise 11-5 Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $260,000 and have a useful life of five years. The system yields an incremental after-tax income of $75,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. b. A machine costs $200,000, has a $14,000 salvage value, is...
Calculate the NPV, IRR, and Payback Period for the following information: A machine is purchased for $12 million with $1 million modification cost and $1 million shipping cost. Net operating working capital of $3 million is needed. The machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 million. The machine has a 5 year life and will be depreciated using straight line depreciation. The salvage value of the machine for depreciation purposes...
what would NPV be?
A machine is purchased for $12 million with $1 million modification cost and $1 million shipping cost. Net operating working capital of $3 million is needed. The machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 million. The machine has a 5 year life and will be depreciated using straight line depreciation. The salvage value of the machine for depreciation purposes is $3 million. It is estimated the...
#6
machine will generate additional annual revenue of $8 million and additional annual costs and expenses of $4 million. The machine has a 5 year life and will be depreciated using straight line depreciation. The salvage value of the machine for depreciation purposes is $3 million. It is estimated the machine can be sold after 5 years for $4 million (tax rate is 40%). The company WACC is 8%. (5) What is the MIRR given cash flows of: -300; -200;...
1.
Compute the payback period, the ARR, the NPV, and the
approximate IRR of this investment. (If you use the tables to
compute the IRR, answer with the closest interest rate shown in
the tables.)
2.
Recommend whether the company should invest in this project.
Rapid Wave is considering purchasing a water park in Oakland, California, for $1,950,000. The new facility will generate annual net cash inflows of $500,000 for eight years. Engineers estimate that the facility will remain useful...
A.) Calculate the payback period for this
project.
B.) Calculate the NPV for this project.
C.) Calculate the IRR for this project.
Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $140,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $855,000 per year. The fixed costs associated with this will be $212,000 per year, and variable...
Please show cash flows, NPV, IRR, and payback period
Sneaker 2013 The business case team had compiled the following baseline information surrounding the Sneaker 2013 project: 1. The life of the Sneaker 2013 project was expected to be six years. Assume the analysis took place at the end of 2012. 2. The suggested retail price of the shoe was $190. Gross margins for high-end athletic footwear averaged about 40% at the retail level, meaning each pair sold would net New...
Saved Exercise 11-5 Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $260,000 and have a useful life of five years. The system yields an incremental after-tax income of $75,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. b. A machine costs $200,000, has a $14,000 salvage value, is...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago