ABC is thinking about buying a kiln that costs $27,000. ABC will use the kiln for...
ABC is thinking about buying a kiln that costs $27,000. ABC will use the kiln for five years, and expects to be able to sell it as scrap at the end of the five year period for $2,000. The kiln won't add any revenues, but it is more efficient than the existing kiln, so it is expected that it would save the firm $15,651 the first year, $9,484 the second year, $8,578 the third year, $4,112 the fourth year, and $3,043 the fifth and final year. The kiln would be depreciated using standard 3-year MACRS percentages (33%, 45%, 15%, and 7%). ABC's cost of capital is 12 percent. Given that information, what is the NPV of this potential project? There is no tax rate given...
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ABC is thinking about buying a kiln that costs $27,000. ABC will
use the kiln for...
ABC, Inc. purchased an equipment at time=0 for $83,515. The shipping and installation costs were $24,451....
ABC, Inc. purchased an equipment at time=0 for $83,515. The shipping and installation costs were $24,451. The equipment is classified as a 5-year MACRS property. The investment in net working capital at time=0 was $7,345 which would be recouped at the end of the project. The project life is five years. At the end of the fifth year, the company will sell the equipment for $34,265. The annual cash flows are $44,618. What is the cash flow of the project...
Suppose we are thinking about renovating a leased office. The renovations would cost $364,000. The renovations...
Suppose we are thinking about renovating a leased office. The renovations would cost $364,000. The renovations will be depreciated straight-line to zero over the five-year remainder of the lease. The new office would save us $36,000 per year in heating and cooling costs. Also, absenteeism should be reduced and the new image should increase revenues. These last two items would result in increased operating revenues of $43,000 annually. The tax rate is 36%, and the discount rate is 13%. Calculate...
Because of its inability to control film and personnel costs in its radiology department, Sanger General...
Because of its inability to control film and personnel
costs in its radiology department, Sanger General Hospital wants to
replace its existing picture archive and communication (PAC) system
with a newer version. The existing system, which has a current book
value of $2,250,000, was purchased three years ago for $3,600,000
and is being depreciated on a straight-line basis over an
eight-year life to a salvage value of $0. This system could be sold
for $800,000 today. The new PAC system...
Eunity to lease out a warehouse instead of using h would have to pay in the...
Eunity to lease out a warehouse instead of using h would have to pay in the next year. D) The cost of a marketing study completed last year ew proshuction 25) A firm is considering a new project that will genetate year for five years. The necessary four years. Whatment necessary for the project will coos revervae od $1,000,000 and cash espenses of $700,000 per the expected free cash flow in the second year of the project i and will...
Chrysarbor Textiles is evaluating a new product, a silk/wool blended fabric. Assume that you were recently...
Chrysarbor Textiles is evaluating a new product, a silk/wool blended fabric. Assume that you were recently hired as assistant to the director of capital budgeting, and you must evaluate the new project. The fabric would be produced in an unused building adjacent to Chrysarbor’s Hickory, North Carolina plant. Chrysarbor owns the building, which is fully depreciated. The required equipment would cost $200,000, plus an additional $40,000 for shipping and installation. In addition, inventories would rise by $25,000, while accounts payable...
3. What discount rate would you use to discount the Brazilian Real cash flows from the...
3. What discount rate would you use to discount the Brazilian Real cash flows from the project? Does this adequately capture the risk of investing in Brazil? 4. What is the present value of the cheap financing being provided by the Japanese equipment manufacturer? How, if at all does this change the valuation of the project? 3. Note the value of the cheap financing should be added to the Br R value that you calculated above. For this calculation you...
Suppose we are thinking about renovating a leased office. The renovations would cost $364,000. The renovations will be depreciated straight-line to zero over the five-year remainder of the lease. The new office would save us $36,000 per year in heating and cooling costs. Also, absenteeism should be reduced and the new image should increase revenues. These last two items would result in increased operating revenues of $43,000 annually. The tax rate is 36%, and the discount rate is 13%. Calculate...
Because of its inability to control film and personnel
costs in its radiology department, Sanger General Hospital wants to
replace its existing picture archive and communication (PAC) system
with a newer version. The existing system, which has a current book
value of $2,250,000, was purchased three years ago for $3,600,000
and is being depreciated on a straight-line basis over an
eight-year life to a salvage value of $0. This system could be sold
for $800,000 today. The new PAC system...
Eunity to lease out a warehouse instead of using h would have to pay in the next year. D) The cost of a marketing study completed last year ew proshuction 25) A firm is considering a new project that will genetate year for five years. The necessary four years. Whatment necessary for the project will coos revervae od $1,000,000 and cash espenses of $700,000 per the expected free cash flow in the second year of the project i and will...
3. What discount rate would you use to discount the Brazilian Real cash flows from the project? Does this adequately capture the risk of investing in Brazil? 4. What is the present value of the cheap financing being provided by the Japanese equipment manufacturer? How, if at all does this change the valuation of the project? 3. Note the value of the cheap financing should be added to the Br R value that you calculated above. For this calculation you...
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