Question 1 Azalea Berhad is considering a new project. The project will require RM400,000 for new...
Question 1
Azalea Berhad is considering a new project. The project will
require RM400,000 for new fixed assets, RM150,000 for additional
inventory and RM35,000 for additional accounts receivable. Short
term debt is expected to increase by RM100,000. The project has a
five-year life. The fixed assets will be depreciated straight-line
to a zero-book value over the life of the project.
At the end of the project, fixed assets can be sold for 25% of
their original cost. The net working capital returns to its
original level at the end of the project. The project is expected
to generate annual sales of RM555,000 and cost of RM340,000. The
tax rate is 35% and the required rate of return is 15%.
Required:
a) What is the initial cost of this project?
(2 Marks)
b) Calculate the net present value if Azalea Berhad
decided to buy the new assets.
(8 Marks)
c) Should the firm proceed with the project?
Discuss.
(2 Marks)
Homework Answers
Add Answer to:
Question 1
Azalea Berhad is considering a new project. The project will
require RM400,000 for new...
3: Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed...
3: Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets, $160,000 for additional inventory and $35,000 for additional accounts receivable. Short-term debt is expected to increase by $100,000 and long-term debt is expected to increase by $300,000. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the fixed assets can be sold...
Judson Industries is considering a new project. The project will initially require $749,000 for n...
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end...
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed...
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end...
Diamond Berhad starts a new manufacturing business on 2 January 2018 building immediately after starting the...
Diamond Berhad starts a new manufacturing business on 2 January 2018 building immediately after starting the operation at a price of RM60,000,000. The useful life of the building is 20 years and it is estimated that there is no residual value for this building. The building has been depreciated using a straight line method. Several other buildings in the immediate area have recently been left vacant At the end of 2016, Diamond Berhad estimates the followings relating to the building:...
pls show calculation Cannelloni Berhad intends to purchase an equipment worth RM500,000. The new equipment will...
pls show calculation
Cannelloni Berhad intends to purchase an equipment worth RM500,000. The new equipment will have a 5-year useful life and will be depreciated to zero using the straight-line method. An import duty of RM50,000 must be paid as the equipment is imported from Korea, on top of RM15,000 for shipping and RM5,000 for installation. The new equipment requires inventories of raw material to increase by RM20,000. Accounts payable is also expected to increase by RM8,000. The net operating...
Question 17 10 pts Western Tech is considering a new project that will require $118,000 of...
Question 17 10 pts Western Tech is considering a new project that will require $118,000 of fixed assets and networking capital of $16,000. The fixed assets will be depreciated on a straight-line basis to a zero salvage value over three years. This project is expected to produce an operating cash flow of $45,000 the first year with that amount decreasing by 5 percent annually for two years before the project is shut down. The fixed assets can be sold for...
Regal Enterprises is considering the purchase of a new embroidering machine. It is expected to generate...
Regal Enterprises is considering the purchase of a new embroidering machine. It is expected to generate additional sales of RM400,000 per year. The machine will cost RM295,000, plus RM3,000 to install it. The embroiderer will save RM12,000 in labor expense each year. The embroiderer will require annual operating expenses of RM136,000. Regal is in the 34% income tax bracket. The machine will be depreciated on a straight-line basis over five years. The company plans to sell the machine at the...
Your company is considering a project which will require the purchase of $785,000 in new equipment....
Your company is considering a project which will require the purchase of $785,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $284,000. Initial net working capital equal to 35.50% of sales will be required. All of the net working capital will be recovered at the end of the project....
1. Firm AAA is considering a new t hree-year new project that requires an initial fixed...
1. Firm AAA is considering a new t hree-year new project that requires an initial fixed asset inves fixed asset will be depreciated straight -ine to zero over it tment of $2.28 million. The r tax life, after which time it will be worthless. The project is estimated 735,000 T working capital of $260,000, to generate $2,040,000 in annual sales, with costs of he project requires an initial investment in net and the fixed asset will have a market value...
A business corporation is considering a new three year project that requires an initial fixed asset...
A business corporation is considering a new three year project that requires an initial fixed asset investment of $5.6 million. The fixed asset will be depreciated straight-line to zero over a 4 year life. The project is estimated to generate $3 million in annual sales with variable costs of $700,000 and fixed costs of $300,000. If the tax rate is 25%. Suppose the project requires an initial investment in net working capital of $500,000 and the fixed assets will be...
3: Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets, $160,000 for additional inventory and $35,000 for additional accounts receivable. Short-term debt is expected to increase by $100,000 and long-term debt is expected to increase by $300,000. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the fixed assets can be sold...
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end...
Diamond Berhad starts a new manufacturing business on 2 January 2018 building immediately after starting the operation at a price of RM60,000,000. The useful life of the building is 20 years and it is estimated that there is no residual value for this building. The building has been depreciated using a straight line method. Several other buildings in the immediate area have recently been left vacant At the end of 2016, Diamond Berhad estimates the followings relating to the building:...
pls show calculation
Cannelloni Berhad intends to purchase an equipment worth RM500,000. The new equipment will have a 5-year useful life and will be depreciated to zero using the straight-line method. An import duty of RM50,000 must be paid as the equipment is imported from Korea, on top of RM15,000 for shipping and RM5,000 for installation. The new equipment requires inventories of raw material to increase by RM20,000. Accounts payable is also expected to increase by RM8,000. The net operating...
Question 17 10 pts Western Tech is considering a new project that will require $118,000 of fixed assets and networking capital of $16,000. The fixed assets will be depreciated on a straight-line basis to a zero salvage value over three years. This project is expected to produce an operating cash flow of $45,000 the first year with that amount decreasing by 5 percent annually for two years before the project is shut down. The fixed assets can be sold for...
1. Firm AAA is considering a new t hree-year new project that requires an initial fixed asset inves fixed asset will be depreciated straight -ine to zero over it tment of $2.28 million. The r tax life, after which time it will be worthless. The project is estimated 735,000 T working capital of $260,000, to generate $2,040,000 in annual sales, with costs of he project requires an initial investment in net and the fixed asset will have a market value...
Most questions answered within 3 hours.
-
In regression analysis: a. the independent variable must be
categorical in nature. b. the variables being...
asked 26 minutes ago -
You want to rent an unfurnished one-bedroom apartment in Boston
next year. The mean monthly rent...
asked 26 minutes ago -
How many moles of carbon dioxide gas will occupy a volume of
6.25 L at 4.2atm...
asked 21 minutes ago -
What is the speed of sound, in FT/S, if the air temperature
is,
A: 0.0C
B:...
asked 6 minutes ago -
explain why a polar protic solvent speeds the rate of an SN1
mechanism
asked 8 minutes ago -
Part A)The reversible chemical reaction . A+B⇌C+D has the
following equilibrium constant: Kc=[C][D][A][B]=2.6
Initially, only A...
asked 11 minutes ago -
[Sales]
Assumes that I am a salesperson of a pharmaceutical firm. I am
trying to sell...
asked 19 minutes ago -
Please help!!
Histidine is a polyprotic acid.
1. Draw a complete titration curve assuming 10.0 mL...
asked 36 minutes ago -
if total energy due two
electron is 1ev the distance between them is ?
asked 33 minutes ago -
Hello
I really dont understand how to work this probelem. A viewed
solution of how it...
asked 24 minutes ago -
How do I write a C program called binary that takes a single
command line argument,...
asked 36 minutes ago -
assume the salaries of elementary school teachers in the United
States normally distributed with a mean...
asked 39 minutes ago