JUST NEED ANSWER FOR Q 2&3 OR Q 2 THANKS What yearly cash flows are relevant...
JUST NEED ANSWER FOR Q 2&3 OR Q 2 THANKS
- What yearly cash flows are relevant for this investment
decision? Do not forget the effect of taxes and the initial
investment amount. Complete the table below using the detail
summarized below:
- Investment:
- Initial Investment - $16M 2016, $2M 2017
- Working Capital - 10% of Incremental Sales
- Operating Savings - $2M 2017, $3.5M 2018-2022
- Sales Revenue - $4M 20017, $10M 2018-2022
- Expenses - CGS – 75% of Revenue, SG&A - 5% of Revenue
- Salvage:
- Working Capital - recoverable at cost
- Initial Investment - 10% or $1.8M before tax, $1.08M after taxes
- Depreciation – Straight Line over 6 years, no salvage, start in 2017
- Investment:
- What discount rate should Worldwide Paper Company (WPC) use to analyze those cash flows? Explain your recommended rate and the assumptions that you used to estimate it. Calculate WAAC cost of debt cost of equity ?
- What is the net present value (NPV) and internal rate of return (IRR) for the investment? How do you interpret these numbers?
Additional info
Cost of capital info
Interest rate jan 15 2016
Bank loan rate(libor) market risk premium
1 year 1.15% historical average 6.0%
Gov bonds corporate bonds
1 years 0.49% Aaa 2.45%
5 years 1.46% Aa 3.38%
10 years 2.04% A 3.85%
30 years 2.82% Baa 5.05%
World wide paper financial data
Balance sheet account
Bank loan payable (LIBOR+ 1%) 500
Long term debt 2500
Common equity 500
Retained earnings 2000
Per share data
Share outstanding 500
Book value per sahare 5
Recent market value per share 24
Other
Bond rating A
Beta 1.10
Homework Answers
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JUST NEED ANSWER FOR Q 2&3 OR Q 2 THANKS
What yearly cash flows are relevant...
What yearly cash flows are relevant for this investment decision? Do no forget the effect of...
What yearly cash flows are relevant for this investment decision?
Do no forget the effect of taxes and the initial investment amount.
19 CASE Worldwide Paper Company In December 2006, Bob Prescott, the controller for the Blue Ridge Mill, was consid- ering the addition of a new primary benefits: to eliminate the need to purchase shortwood from an outside sup- plier and create the opportunity to sell shortwood on the open market as a ne ket for Worldwide Paper Company...
Someone please help! If possible can whoever answers give a detailed explanation with the answer so...
Someone please help! If possible can whoever answers give a
detailed explanation with the answer so I can fully understand.
Thank you in advance.
The question is as followed
1.
A. What yearly cash flows are relevant fr this investment
decision? Do not forget the effect of taxes and the initial
investment amount
B. What discount rate should Worldwide Paper Company (WPC) use
to analyze those cash flows? Be prepared to justify your
recommended rate and the assumptions that you...
Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and 8 Capital Budgeting...
Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and 8 Capital Budgeting (Investment) De cisions 59 (a) Estimate NPV, IRR and Payback Period of the project if equipment is fully 60 depreciated in first year and tax rate equals to 21 %. Would you 61 accept or reject the project? 62 (b) As a CFO of the firm, which of the above two scenario (a) or (b) 63 would you choose? Why? FINC 3310-Fall 2019 Learning...
Q - complete Statement of Cash Flows Details: Cost of Debt: by using the long term...
Q - complete Statement of Cash Flows
Details: Cost of Debt: by using the long term debt, bank rates,
etc. A good estimate of the cost of debt for you to use is 3.85%
(before tax).
Cost of Equity: The cost of equity is based upon market value,
and for your purpose of analysis, use 8.6%
The components of capital breakdown: Debt 20%; Equity 80%
World Wide Cash Flow Template- Solution QSearch Sheet tShare View Home Insert Page Layout Formulas...
Use the following information for the next three problems, Year Cash Flow 1 $12,500 2 $14,000...
Use the following information for the next three problems, Year Cash Flow 1 $12,500 2 $14,000 3 $10,000 4 $11,000 5 $16,000 5. What is the NPV of above project if the initial investment was $35,000? Assume a cost of capital of 11% 6. Calculate the IRR assuming a cost of capital of 11%. 7. Calculate the MIRR of the project assuming a cost of capital of 11%. ___________________________________________________________________________ 8. Suppose that you are approached with an offer to purchase...
1. What are the relevant cash flows that should be used to analyze this project? 2. Please calcu...
1. What are the relevant cash flows that should be used to
analyze this project?
2. Please calculate OCF, NCS, and change in NWC
3. Based on the forecast of the cash flows, could you
calculate the net present value, internal rate of return,
profitability index, payback period, discounted payback period of
the project?
Superman Sports Company The CEO of Superman Sports Company, Russell Warren, was a mechanical engineer. He developed a sound technique of making baseball bats and founded...
Answer all parts since its one question Please first analyze cash flows for Project L. Then...
Answer all parts since its one question
Please first analyze cash flows for Project L. Then calculate NPV and IRR, and make your capital budgeting decision. To study the health-food market, Allied has done a market research in 2019. This market research costed Allied $10k. The research confirmed Allied's previous belief that the health-food industry has a huge potential and will be a highly profitable industry. Therefore, Allied is considering a new expansion project, Project L, which is a new...
answer all parts fully. thank you! Please first analyze cash flows for Project L. Then calculate...
answer all parts fully. thank you!
Please first analyze cash flows for Project L. Then calculate NPV and IRR, and make your capital budgeting decision. To study the health-food market, Allied has done a market research in 2019. This market research costed Allied $10k. The research confirmed Allied's previous belief that the health-food industry has a huge potential and will be a highly profitable industry. Therefore, Allied is considering a new expansion project. Proiect L, which is a new health-food...
5. Assuming the free cash flows from synergy will remain level in perpetuity, estimate the after-tax...
5. Assuming the free cash flows from synergy will remain level
in perpetuity, estimate the after-tax present value of anticipated
synergy?
Please show all steps.
END OF CHAPTER CASE STUDY: DID UNITED TECHNOLOGIES OVERPAY FOR ROCKWELL COLLINS? Case Study Objectives: To Illustrate • A methodology for determining if an acquirer overpaid for a target firm, • How sensitive discounted cash flow valuation is to changes in key assumptions, and • The limitations of discounted cash flow valuation methods. United Technologies...
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...
What yearly cash flows are relevant for this investment decision?
Do no forget the effect of taxes and the initial investment amount.
19 CASE Worldwide Paper Company In December 2006, Bob Prescott, the controller for the Blue Ridge Mill, was consid- ering the addition of a new primary benefits: to eliminate the need to purchase shortwood from an outside sup- plier and create the opportunity to sell shortwood on the open market as a ne ket for Worldwide Paper Company...
Someone please help! If possible can whoever answers give a
detailed explanation with the answer so I can fully understand.
Thank you in advance.
The question is as followed
1.
A. What yearly cash flows are relevant fr this investment
decision? Do not forget the effect of taxes and the initial
investment amount
B. What discount rate should Worldwide Paper Company (WPC) use
to analyze those cash flows? Be prepared to justify your
recommended rate and the assumptions that you...
Q#2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and 8 Capital Budgeting (Investment) De cisions 59 (a) Estimate NPV, IRR and Payback Period of the project if equipment is fully 60 depreciated in first year and tax rate equals to 21 %. Would you 61 accept or reject the project? 62 (b) As a CFO of the firm, which of the above two scenario (a) or (b) 63 would you choose? Why? FINC 3310-Fall 2019 Learning...
Q - complete Statement of Cash Flows
Details: Cost of Debt: by using the long term debt, bank rates,
etc. A good estimate of the cost of debt for you to use is 3.85%
(before tax).
Cost of Equity: The cost of equity is based upon market value,
and for your purpose of analysis, use 8.6%
The components of capital breakdown: Debt 20%; Equity 80%
World Wide Cash Flow Template- Solution QSearch Sheet tShare View Home Insert Page Layout Formulas...
1. What are the relevant cash flows that should be used to
analyze this project?
2. Please calculate OCF, NCS, and change in NWC
3. Based on the forecast of the cash flows, could you
calculate the net present value, internal rate of return,
profitability index, payback period, discounted payback period of
the project?
Superman Sports Company The CEO of Superman Sports Company, Russell Warren, was a mechanical engineer. He developed a sound technique of making baseball bats and founded...
Answer all parts since its one question
Please first analyze cash flows for Project L. Then calculate NPV and IRR, and make your capital budgeting decision. To study the health-food market, Allied has done a market research in 2019. This market research costed Allied $10k. The research confirmed Allied's previous belief that the health-food industry has a huge potential and will be a highly profitable industry. Therefore, Allied is considering a new expansion project, Project L, which is a new...
answer all parts fully. thank you!
Please first analyze cash flows for Project L. Then calculate NPV and IRR, and make your capital budgeting decision. To study the health-food market, Allied has done a market research in 2019. This market research costed Allied $10k. The research confirmed Allied's previous belief that the health-food industry has a huge potential and will be a highly profitable industry. Therefore, Allied is considering a new expansion project. Proiect L, which is a new health-food...
5. Assuming the free cash flows from synergy will remain level
in perpetuity, estimate the after-tax present value of anticipated
synergy?
Please show all steps.
END OF CHAPTER CASE STUDY: DID UNITED TECHNOLOGIES OVERPAY FOR ROCKWELL COLLINS? Case Study Objectives: To Illustrate • A methodology for determining if an acquirer overpaid for a target firm, • How sensitive discounted cash flow valuation is to changes in key assumptions, and • The limitations of discounted cash flow valuation methods. United Technologies...
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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