(a) Determine the present values of the following items for an annual interest rate of 10%...
(a) Determine the present values of the following items for an annual interest rate of 10% and 20%.
(i) $8,000 earned 6 years from now.
(ii) A payment of $15,000 at the end of each year for a period of 10 years.
(b) A manufacturing process has the following financial information:
Fixed capital $15,000,000
Working capital $4,500,000
Salvage value $2,000,000
Operating cost $13,000,000/yr
Revenue $20,000,000/yr
SARE expenses $2,000,000/yr
Assume a depreciation lifetime of 7 years, straight-line depreciation, and a plant lifetime of 10 years with a minimum annual rate of return (MARR) of 15% and a tax rate of 52%.
(i) What is the net present value (NPV) of the process before taxes?
(ii) What is the NPV of the process after taxes?
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(a) Determine the present values of the following items for an
annual interest rate of 10%...
56 PROBLEME 57 58 Aussine is considering a three-yos projet 59 The project requires an initial...
56 PROBLEME 57 58 Aussine is considering a three-yos projet 59 The project requires an initial Istment of 515 million (at times) 60 The project is estimated to generate $20 million in sales cher has to of $11 million per your ch you 61 The tax rate is 28% and the discount rate (WACC) 18% 62 Usestrihine depreciation 63 The project has a salvage value of no read the end of the project 54 Additionally working capital of 3 million...
Assuming 10% as the annual rate of discount or interest, calculate the net present value for...
Assuming 10% as the annual rate of discount or interest, calculate the net present value for the following project: Initial investment (an outflow) $ 40000 Revenue yr 1: $ 80000 Costs yr 1: $ 60000 Revenue yr 2: $100000 Costs yr2: $60000 Revenue yr 3: $120000 Costs yr 3: $ 70000
Problem no 1: An asset is purchased for $10, 000 with 50% equity and 50% debt....
Problem no 1: An asset is purchased for $10, 000 with 50% equity and 50% debt. The custom debt financing details are shown in the "principle" and "interest " columns. The company has elected to apply straight-line depreciation assuming no salvage value at the end of a 10-year life. Annual gross income is $8,000 and annual expenses plus upgrade expenses are $5,000. Both income and costs are subject to an inflation rate of 5%. The corporate combined federal and state...
Calculate the Present Value Ratio for the following Investment C, assuming an annual discount rate of...
Calculate the Present Value Ratio for the following Investment C, assuming an annual discount rate of 12%. C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=8,000 0 1 2 3 4 ... 10 C: Cost, I:Income, L: Salvage value
Calculate the NPV for the following Investment A, assuming an annual discount rate of 10%. C=10,000...
Calculate the NPV for the following Investment A, assuming an annual discount rate of 10%. C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=10,000 0 1 2 3 4 ... 10 C: Cost, I:Income, L: Salvage value
Part 1 1. Calculate the NPV for the following Investment A, assuming an annual discount rate...
Part 1 1. Calculate the NPV for the following Investment A, assuming an annual discount rate of 10%. C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=10,000 0 1 2 3 4 ... 10 C: Cost, I:Income, L: Salvage value Part 2 2. Calculate the Benefit-Cost Ratio for the following Investment B, assuming an annual discount rate of 14%. C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=10,000 0 1 2 3 4 ... 10 C: Cost, I:Income, L: Salvage value
Problem 2 A proposed process (see table below) has a lifetime of 10 years and a...
Problem 2
A proposed process (see table below) has a lifetime of 10 years
and a total fixed capital investment of $60 million (to be
committed in equal parts over years 0 and 1). Just prior to startup
(end of year 1), a working capital of $25 million is required.
Projected annual revenues and operating expenses yield an annual
pre-tax cash flow of $50 million, however the plant is projected to
operate at 50% capacity in year 2. The 5-year...
International Financial Management Quiz Ch 14 (10 pts) ot of a subsidiary in Norway. The initial...
International Financial Management Quiz Ch 14 (10 pts) ot of a subsidiary in Norway. The initial investment would terminate the project after four as Baps' existing projects. All cash flows the end of each year. Listed below are the estimated Croiect's lifetime in Norwegian kroner (NOK): Year 3 Year 4 Yr 0 NOK 17,000,000 NOK 20,000,000 Year 1 NOK-44,450,000 NOK10,000,000 35. Baps' exchange rate forecast for the Norwegian The current exchange rate of the Norwegian kroner is $. 135. Baps...
Assume a 10% annual interest rate. (i) What is the present value of a 25 year, $900 annuity if the first payment does not occur until 7 years from today? (ii) What would be the present value of a perp...
Assume a 10% annual interest rate. (i) What is the present value of a 25 year, $900 annuity if the first payment does not occur until 7 years from today? (ii) What would be the present value of a perpetuity with the same characteristics ($900, first payment in 7 six years).
1.) Calculate the Benefit-Cost Ratio for the following Investment B, assuming an annual discount rate of...
1.) Calculate the Benefit-Cost Ratio for the following Investment B, assuming an annual discount rate of 14%. C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=10,000 0 1 2 3 4 ... 10 C: Cost, I:Income, L: Salvage value 2.) Calculate the Present Value Ratio for the following Investment C, assuming an annual discount rate of 12%. C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=8,000 0 1 2 3 4 ... 10 C: Cost, I:Income, L: Salvage value
56 PROBLEME 57 58 Aussine is considering a three-yos projet 59 The project requires an initial Istment of 515 million (at times) 60 The project is estimated to generate $20 million in sales cher has to of $11 million per your ch you 61 The tax rate is 28% and the discount rate (WACC) 18% 62 Usestrihine depreciation 63 The project has a salvage value of no read the end of the project 54 Additionally working capital of 3 million...
Problem no 1: An asset is purchased for $10, 000 with 50% equity and 50% debt. The custom debt financing details are shown in the "principle" and "interest " columns. The company has elected to apply straight-line depreciation assuming no salvage value at the end of a 10-year life. Annual gross income is $8,000 and annual expenses plus upgrade expenses are $5,000. Both income and costs are subject to an inflation rate of 5%. The corporate combined federal and state...
Problem 2
A proposed process (see table below) has a lifetime of 10 years
and a total fixed capital investment of $60 million (to be
committed in equal parts over years 0 and 1). Just prior to startup
(end of year 1), a working capital of $25 million is required.
Projected annual revenues and operating expenses yield an annual
pre-tax cash flow of $50 million, however the plant is projected to
operate at 50% capacity in year 2. The 5-year...
International Financial Management Quiz Ch 14 (10 pts) ot of a subsidiary in Norway. The initial investment would terminate the project after four as Baps' existing projects. All cash flows the end of each year. Listed below are the estimated Croiect's lifetime in Norwegian kroner (NOK): Year 3 Year 4 Yr 0 NOK 17,000,000 NOK 20,000,000 Year 1 NOK-44,450,000 NOK10,000,000 35. Baps' exchange rate forecast for the Norwegian The current exchange rate of the Norwegian kroner is $. 135. Baps...
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