Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will require an initial investment of
$2.18 million in net working capital today. The plant will last 10 years, at which point the full investment in net working capital will be recovered. Given an annual discount rate of
5.6%, what is the net present value of this working capital investment?
Initial Investment = $2.18 Million or 2180000, discount rate = 5.6%, Number of years = 10
NPV = -2180000 + [2180000 / (1+.056)10]
NPV = -2180000 + 1264207.84
NPV = -915792.16
Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will...
Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will require an initial investment of $ 3.2$ million in net working capital today. The plant will last ten years, at which point the full investment in net working capital will be recovered. Given an annual discount rate of 5 % what is the net present value of this working capital investment? The NPV of this working capital investment is $nothingm. (Round to the nearest...
Anderson Motors Inc. is contemplating building a new plant. The company anticipates that the plant will require an initial investment of $2 million in net working capital today. The plant will last 10 years, at which point the full investment in net working capital will be recovered. Given an annual discount rate of 6%, what is the net present value of this working capital investment? -$883,210 $503,110 -$2,000,000 -$598,983
(Related to Checkpoint 11.6) (MIRR calculation) Emily's Soccer Mania is considering building a new plant. This project would require an initial cash outlay of $11 million and would generate annual cash inflows of $3.5 million per year for years one through four. In year five the project will require an investment outlay of $4.2 million. During years 6 through 10 the project will provide cash inflows of $4.2 million per year. Calculate the project's MIRR, given a discount rate 9...
Jansen Company, Inc. is contemplating a new 4 – year expansion project that requires an initial fixed asset investment of $3.6 million and initial working capital investment of $300,000. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it is expected to be sold for $200,000 cash. The project is estimated to generate $3,050,000 in annual sales, with costs of $1,992,000. If the tax rate is 35%, what is the Operating Cash...
CSC is evaluating a new project to produce encapsulators. The initial investment in plant and equipment is $500,000. Sales of encapsulators in year 1 are forecasted at $200,000 and costs at $100,000. Both are expected to increase by 10% a year in line with inflation. Profits are taxed at 35%. Working capital in each year consists of inventories of raw materials and is forecasted at 20% of sales in the following year. The project will last five years and the...
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $14 million, and production and sales will require an initial $3 million investment in net operating working capital. The company's tax rate is 25%. Enter your answers as a positive values. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places. a. What is the initial investment outlay? million b. The company spent...
(MIRR calculation) Artie's Wrestling Stuff is considering building a new plant. This plant would require an initial cash outlay of $8 million and would generate annual free cash inflows of $3 million per year for 8 years. Calculate the project's MIRR given: a. A required rate of return of 9 percent b. A required rate of return of 11 percent c. A required rate of return of 16 percent
Windhoek Mines Lidl of Namibia is contemplating the purchase of equipment to exploda mineral depot on and to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the Cost of new equament and timbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years...
Investment Outlay Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $1 million investment in net operating working capital. The company's tax rate is 35%. a. What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000 b. The company spent and expensed $150,000 on research related to the new product last year. Would this change...
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $12 million, and production and sales will require an initial $5 million investment in net operating working capital. The company's tax rate is 40%. What is the initial investment outlay? Write out your answer completely. For example, 2 million should be entered as 2,000,000. $ The company spent and expensed $150,000 on research related to the new project last year. Would this change your answer? Rather...