Homework Answers
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=425000/1.12^20
=44058.38
NPV=Present value of inflows-Present value of outflows
=44058.38-425000
=-380941.62(Approx)(Negative).
Add Answer to:
A project requires an increase in net working capital of $425,000 at time 0 that will...
The project requires a level of net working capital in the amount equal to 12% of...
The project requires a level of net working capital in the amount equal to 12% of the next year’s sales. Any increase in NWC is a negative cash flow, and any decrease is a positive cash flow. This project has a 4-year operating life, so any NWC expenditures will be recovered in Year 4. (That is, accounts receivables are received and inventories are drawn down.) Year 0 Year 1 Year 2 Year 3 Year 4 Sales $250,000 $257,500 $265,225 $273,188...
Down Under Boomerang, Inc., is considering a new 6-year project that requires an initial investment in...
Down Under Boomerang, Inc., is considering a new 6-year project that requires an initial investment in a fixed asset of $6.426 million. The fixed asset will be depreciated straight- line to zero over its 6-year life. After Year O, the project is expected to generate $5,712,000 in annual sales per year, with operating costs of $2,284,800 per year. The tax rate is 33 percent and the appropriate discount rate is 17 percent. The project requires an increase in net working...
How does net working capital affect the NPV of a 4-year project if working capital is...
How does net working capital affect the NPV of a 4-year project if working capital is expected to increase by $12,000 and the project has a 8.3% discount rate? Answer to 2 decimal places, for example 100.12.
A project has an initial requirement of $192212 for new equipment and $8681 for net working...
A project has an initial requirement of $192212 for new equipment and $8681 for net working capital. The installation costs are expected to be $19053. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $126130. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $96063 and the cost of capital is 6%...
Your firm is contemplating the purchase of a new $425,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $425,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $48,000 at the end of that time. You will save $149,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $41,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. If...
What is the net effect on a firm's working capital if a new project requires: $30,000...
What is the net effect on a firm's working capital if a new project requires: $30,000 increase in inventory, $10,000 increase in accounts receivable, $25,000 increase in machinery, and a $20,000 increase in accounts payable? + $20,000 + $45,000 + $10,000 - $5,000
Saved Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset...
Saved Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,810,000 in annual sales, with costs of $700,000. The project requires an initial investment in net working capital of $450,000, and the fixed asset will have a market value of $480,000 at the end of the project. a. If the tax rate is...
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.82 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,120,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $340,000, and the fixed asset will have a market value of $230,000 at the end...
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase in net working capital of $8,000. The project has a life of 20 years with an expected salvage value of $100,000. The project will be depreciated via simplified straight-line depreciation. Revenues are expected to increase by $120,000 per year and operating expenses by $14,000 per year. The firm's marginal tax rate is 40 percent and the cost of capital for this project is 12%....
Let's suppose that the net working capital requirements for a project is the 20% of the...
Let's suppose that the net working capital requirements for a project is the 20% of the projected annual sales for each year. Let's suppose a project has a 4 years life period. In cases we want to calculate the net working capital , we add only the changes in Net working capital for years 1-4.Why only the changes? Why at time year=0 , we add the whole working capital requirements (20% X sales of next year)? Please try to explain...
Down Under Boomerang, Inc., is considering a new 6-year project that requires an initial investment in a fixed asset of $6.426 million. The fixed asset will be depreciated straight- line to zero over its 6-year life. After Year O, the project is expected to generate $5,712,000 in annual sales per year, with operating costs of $2,284,800 per year. The tax rate is 33 percent and the appropriate discount rate is 17 percent. The project requires an increase in net working...
Your firm is contemplating the purchase of a new $425,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $48,000 at the end of that time. You will save $149,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $41,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. If...
Saved Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,810,000 in annual sales, with costs of $700,000. The project requires an initial investment in net working capital of $450,000, and the fixed asset will have a market value of $480,000 at the end of the project. a. If the tax rate is...
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.82 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,120,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $340,000, and the fixed asset will have a market value of $230,000 at the end...
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase in net working capital of $8,000. The project has a life of 20 years with an expected salvage value of $100,000. The project will be depreciated via simplified straight-line depreciation. Revenues are expected to increase by $120,000 per year and operating expenses by $14,000 per year. The firm's marginal tax rate is 40 percent and the cost of capital for this project is 12%....
Most questions answered within 3 hours.
-
another 515 students are selected at random from florida. they are
given a 3-hour preparation course...
asked 1 minute ago -
A regional distributor deals with a product ABC that has an
annual demand of 3000 unit....
asked 33 minutes ago -
You have a 825.3 mL sample of 2.754 M HA (Ka =
4.49⋅10−4). Calculate the pH...
asked 3 hours ago -
The blues made its way into many kinds of music. Eric Clapton,
The Beatles, and Elvis...
asked 5 hours ago -
8. A wave in a string has a wave function given by: y (x, t) =...
asked 4 hours ago -
If you’re standing at the bottom of a hill and asked to evaluate
it while being...
asked 6 hours ago -
1. Which region has taken the lead in the world of
e-waste handling?
a) European Union...
asked 6 hours ago -
A 8.15- g bullet from a 9-mm pistol has a velocity of 366.0 m/s.
It strikes...
asked 8 hours ago -
The outstanding bonds of Alpha Extracts have a yield to maturity
of 7.4 percent and a...
asked 8 hours ago -
The Problem: The Case of the Harmonizing Vacations
Your CEO is exploring partnering with a European...
asked 9 hours ago -
A chemical equation is balanced by adding coefficients in front
of some formulas so that the...
asked 9 hours ago -
From the literature (reference your sources): What are the
lattice parameters of calcite and aragonite? Why...
asked 10 hours ago