Problem 10.14 Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires...
Problem 10.14 Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,111,359. have a life of five years, and would produce the cash flows shown in the following table. Year Cash Flow 1 $602,952 2 -287,525 3 933,809 4 998,838 5 771,435
What is the NPV if the discount rate is 12.91 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.) NPV is $
Problem 11.20 Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.90 million for land and $8.90 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.24 million, $2.50 million above book value. The farm is expected to produce revenue of $2.02 million each year, and annual cash flow from operations equals $1.82 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 9 percent. Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.) NPV $
The project should be
Problem 11.24 Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain’s opportunity cost of capital is 13.0 percent, and the costs and values of investments made at different times in the future are as follows: Year Cost Value of Future Savings (at time of purchase) 0 $5,000 $7,000 1 4,450 7,000 2 3,900 7,000 3 3,350 7,000 4 2,800 7,000 5 2,250 7,000 Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.) The NPV of each choice is: NPV0 = $ NPV1 = $ NPV2 = $ NPV3 = $ NPV4 = $ NPV5 = $ Suggest when should Bell Mountain buy the new accounting system? Bell Mountain should purchase the system in .
Problem 12.24 Chip’s Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 84 percent as high if the price is raised 18 percent. Chip’s variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm’s FCF for the year? (Round answers to nearest whole dollar, e.g. 5,275.) At $20 per bottle the Chip’s FCF is $ and at the new price Chip’s FCF is $ .
Problem 13.11 Capital Co. has a capital structure, based on current market values, that consists of 42 percent debt, 12 percent preferred stock, and 46 percent common stock. If the returns required by investors are 9 percent, 11 percent, and 19 percent for the debt, preferred stock, and common stock, respectively, what is Capital’s after-tax WACC? Assume that the firm’s marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) After tax WACC = %
FIN 571 Final Exam (30 Multiple Choice Questions) (100% score)
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FIN xxx xxxxx xxxx xxx xxxxxxxx xxxxxx xxxxxxxxxxxx (100% xxxxxx
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Which of the xxxxxxxxx is considered a hybrid xxxxxxxxxxxxxx xxxxx
xxxxxxx xxxxxxxxx partnership
xxxxx of the following is x xxxxxxxxx within the xxxxxx xxxxxxxxxxxxx
Which xx the xxxxxxxxx presents x summary xx the changes xx a firm’x balance sheet xxxx the beginning xx xx accounting period to xxx end xx xxxx accounting xxxxxxx
The statement xx cash flows.
xxxxxxx xxxxx has current xxxxxx xx $ 1,456,312 and xxxxx assets of $4,812,369 xxx the year xxxxxx xxxxxxxxx xxx xxxxx xx also xxx current xxxxxxxxxxx xx $1,041,012, common equity of $1,500,000, and retained xxxxxxxx xx xxxxxxxxxxx xxx xxxx xxxxxxxxx xxxx xxxx the firm have?
xxxxxxx Corp. has an inventory turnover xxxxx of 5.6. What is xxx firm's days's sales xx xxxxxxxxxx
Your xxxx xxx xx xxxxxx xxxxxxxxxx xx 2.47. xxxx xx its xxxxxxxxxxxxxx ratio?
xxxxx xx xxx following is not a method xx “xxxxxxxxxxxx”x
xxxxxxx the xxxxxx system xx xxxxxxx a xxxx’x performance.
Jack Robbins xx xxxxxx
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