International Foods Corporation, a U.S.-based food company, is considering expanding its soup-processing operations in Switzerland. The company plans a net investment of $7 million in the project. The current spot exchange rate is SF5.5 per dollar (SF = Swiss francs). Net cash flows for the expansion project are estimated to be SF3 million for 7 years and nothing thereafter. Based on its analysis of current conditions in Swiss capital markets, International Foods has determined that the applicable cost of capital for the project is 19 percent. Calculate the net present value of the proposed expansion project. Use Table IV to answer the questions below. Enter your answer in millions. For example, an answer of $1.20 million should be entered as 1.20, not 1,200,000. Round your answer to two decimal places.
Homework Answers
| International Foods Corporation | |||
| NPV calculation of expansion Project | |||
| Current exchange rate for SF :USD=5.5:1 | |||
| Net annual Cash flow from Project | SF 3 Million | ||
| Net annual Cash flow from Project in USD=3/5.5= | USD 0.545 Miliion | ||
| NPV Calculation | a. | b. | |
| Particulars | Amt $ Million | PV Factor / PVIFA @19% for 7 years | PV of Cash flow=a*b |
| Initial Investment | (7.00) | 1 | (7.00) |
| Net Annual Cash flow from Year 1 to 7 | 0.545 | 3.706 | 2.02 |
| Total | (4.98) | ||
| So , NPV of the project is $(4.98) Million |
Add Answer to:
International Foods Corporation, a U.S.-based food company, is
considering expanding its soup-processing operations in
Switzerland. The...
The Buffalo Snow Shoe Company is considering manufacturing radial snow shoes, which are more durable and...
The Buffalo Snow Shoe Company is considering manufacturing
radial snow shoes, which are more durable and offer better
traction. Buffalo estimates that the investment in manufacturing
equipment will cost $240,000 and will have a 10-year economic life.
Buffalo will depreciate the equipment on a straight-line basis to a
$0 estimated salvage value over a 10-year period. The estimated
selling price of each pair of shoes will be $50. Buffalo
anticipates that it can sell 5,000 pairs a year at this...
A machine that costs $6,750 is expected to operate for 9 years. The estimated salvage value...
A machine that costs $6,750 is expected to operate for 9 years.
The estimated salvage value at the end of 9 years is $0. The
machine is expected to save the company $1,669 per year before
taxes and depreciation. The company depreciates its assets on a
straight-line basis and has a marginal tax rate of 40 percent. What
is the exact internal rate of return on this investment? Use the
calculator and Table IV to answer the question. Round your...
A company is planning to invest $70,000 (before tax) in a personnel training program. The $70,000...
A company is planning to invest $70,000 (before tax) in a
personnel training program. The $70,000 outlay will be charged off
as an expense by the firm this year (year 0). The returns from the
program in the form of greater productivity and a reduction in
employee turnover are estimated as follows (on an after-tax basis):
Years 1–10: $14,000 per year Years 11–20: $21,000 per year The
company has estimated its cost of capital to be 12 percent. Assume
that...
Dooley, Inc., has outstanding $50 million (par value) bonds that pay an annual coupon rate of...
Dooley, Inc., has outstanding $50 million (par value) bonds that
pay an annual coupon rate of interest of 8.5 percent. Par value of
each bond is $1,000. The bonds are scheduled to mature in 17 years.
Because of Dooley’s increased risk, investors now require a 15
percent rate of return on bonds of similar quality with 17 years
remaining until maturity. The bonds are callable at 112 percent of
par at the end of 9 years. Use Table II and...
a: should/should not b: should/shouod not appendix d An investment costs $23,958 and will generate cash...
a: should/should not
b: should/shouod not
appendix d
An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm's cost of capital is 10 percent. Use Appendix D to answer the questions a. What is the investment's Internal rate of return? Round your answer to the nearest whole number Based on the internal rate of return, should the firm make the investment? The investment Select B made b. What is the investment's net present...
a: should/should not b: should/should not c: the same/different An investment costs $17,944 and will generate...
a: should/should not
b: should/should not
c: the same/different
An investment costs $17,944 and will generate cash flow of $4,000 annually for six years. The firm's cost of capital is 10 percent. Use Appendix D to answer the questions. a. What is the investment's internal rate of return? Round your answer to the nearest whole number Based on the internal rate of return, should the firm make the investment? The investment -Select B made. b. What is the investment's net...
King’s Department Store is contemplating the purchase of a new machine at a cost of $18,392....
King’s Department Store is contemplating the purchase of a new
machine at a cost of $18,392. The machine will provide $4,100 per
year in cash flow for six years. King’s has a cost of capital of 13
percent. Use Appendix D for an approximate answer but calculate
your final answer using the financial calculator method.
a. What is the internal rate of return?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places.)
...
ou buy a new piece of equipment for $28,192, and you receive a cash inflow of...
ou buy a new piece of equipment for $28,192, and you receive a
cash inflow of $4,500 per year for 16 years. Use Appendix D for an
approximate answer but calculate your final answer using the
financial calculator method.
What is the internal rate of return? (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places.)
Internal rate of return _________%
(1+1 Present value of an annuity of $1, PVFA PV A Appendix...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $65,000 per year; operating costs with the new machine are expected to be $47,000 per year. The new machine will cost $70,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost...
CENGAGE MINDTAP search trus cour Exam 2 | 128:36 Back to Assignment Attempts 12. Problem 16-03...
CENGAGE MINDTAP search trus cour Exam 2 | 128:36 Back to Assignment Attempts 12. Problem 16-03 eBook Problem 16-03 A stock costs $100 and pays a $6 annual dividend. If you expect to sell the stock after seven years for $120, what is your anticipated return on the investment? Use Appendix Band Appendix D to answer the question. Round your answer to the nearest whole number. We were unable to transcribe this imageStart Mindtop Acer Mindtapenko Appendix B.jpg Appen &...
The Buffalo Snow Shoe Company is considering manufacturing
radial snow shoes, which are more durable and offer better
traction. Buffalo estimates that the investment in manufacturing
equipment will cost $240,000 and will have a 10-year economic life.
Buffalo will depreciate the equipment on a straight-line basis to a
$0 estimated salvage value over a 10-year period. The estimated
selling price of each pair of shoes will be $50. Buffalo
anticipates that it can sell 5,000 pairs a year at this...
A machine that costs $6,750 is expected to operate for 9 years.
The estimated salvage value at the end of 9 years is $0. The
machine is expected to save the company $1,669 per year before
taxes and depreciation. The company depreciates its assets on a
straight-line basis and has a marginal tax rate of 40 percent. What
is the exact internal rate of return on this investment? Use the
calculator and Table IV to answer the question. Round your...
A company is planning to invest $70,000 (before tax) in a
personnel training program. The $70,000 outlay will be charged off
as an expense by the firm this year (year 0). The returns from the
program in the form of greater productivity and a reduction in
employee turnover are estimated as follows (on an after-tax basis):
Years 1–10: $14,000 per year Years 11–20: $21,000 per year The
company has estimated its cost of capital to be 12 percent. Assume
that...
Dooley, Inc., has outstanding $50 million (par value) bonds that
pay an annual coupon rate of interest of 8.5 percent. Par value of
each bond is $1,000. The bonds are scheduled to mature in 17 years.
Because of Dooley’s increased risk, investors now require a 15
percent rate of return on bonds of similar quality with 17 years
remaining until maturity. The bonds are callable at 112 percent of
par at the end of 9 years. Use Table II and...
a: should/should not
b: should/shouod not
appendix d
An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm's cost of capital is 10 percent. Use Appendix D to answer the questions a. What is the investment's Internal rate of return? Round your answer to the nearest whole number Based on the internal rate of return, should the firm make the investment? The investment Select B made b. What is the investment's net present...
a: should/should not
b: should/should not
c: the same/different
An investment costs $17,944 and will generate cash flow of $4,000 annually for six years. The firm's cost of capital is 10 percent. Use Appendix D to answer the questions. a. What is the investment's internal rate of return? Round your answer to the nearest whole number Based on the internal rate of return, should the firm make the investment? The investment -Select B made. b. What is the investment's net...
King’s Department Store is contemplating the purchase of a new
machine at a cost of $18,392. The machine will provide $4,100 per
year in cash flow for six years. King’s has a cost of capital of 13
percent. Use Appendix D for an approximate answer but calculate
your final answer using the financial calculator method.
a. What is the internal rate of return?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places.)
...
ou buy a new piece of equipment for $28,192, and you receive a
cash inflow of $4,500 per year for 16 years. Use Appendix D for an
approximate answer but calculate your final answer using the
financial calculator method.
What is the internal rate of return? (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places.)
Internal rate of return _________%
(1+1 Present value of an annuity of $1, PVFA PV A Appendix...
CENGAGE MINDTAP search trus cour Exam 2 | 128:36 Back to Assignment Attempts 12. Problem 16-03 eBook Problem 16-03 A stock costs $100 and pays a $6 annual dividend. If you expect to sell the stock after seven years for $120, what is your anticipated return on the investment? Use Appendix Band Appendix D to answer the question. Round your answer to the nearest whole number. We were unable to transcribe this imageStart Mindtop Acer Mindtapenko Appendix B.jpg Appen &...
Most questions answered within 3 hours.
-
What is meant by a “term premium”?
What can explain such a premium? Is it a...
asked 1 hour ago -
23. Which molecule has only covalent bonds? A. CO2 B. Al2O3 C.
Mg3N2
24. The octet...
asked 1 hour ago -
the
total pressure for a mixture of N2O4 and NO2 is 2.20 atm. If Kp=
7.10...
asked 2 hours ago -
Delaware Corp. prepared a master budget that included $22,385
for direct materials, $28,600 for direct labor,...
asked 1 hour ago -
For pesticide HCB (hexachlorobenzene), its logarithmic partition
coefficient log Kow is 5.6. What would be the...
asked 2 hours ago -
A chemist requires 0.422 mil Na2CO3 for a reaction. How many
grams does this correspond to?
asked 2 hours ago -
If the vapor pressure of carvone is approximately 9.4 torr at 99
°C, approximately how much...
asked 2 hours ago -
A juice bottling company is carrying out a test at 10%
significance that the mean population...
asked 2 hours ago -
What is the reflectivity (in percent) needed to keep water at a
temperature near its freezing...
asked 2 hours ago -
Suppose that the average surface temperature of Earth is 300K.
Assume this is uniform over its...
asked 2 hours ago -
Draw the condensed structural formula for alkenes and alkynes or
the line-angle structural formula for cycloalkenes...
asked 2 hours ago -
M. Laing has suggested a new arrangement of the periodic table
(J.Chem.Ed.1989, 66,
746). Answer the following...
asked 3 hours ago