Even complicated and confusing topics will be easily developed and covered if you request our help writing an essay. Place an order today!

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 $2,131,241. have a life of five years, and would produce the cash flows shown in the following table.

Year

Cash Flow

1

$401,028

2

-254,065

3

951,159

4

1,102,111

5

626,056



What is the NPV if the discount rate is 15.98 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 $12.10 million. This investment will consist of $2.10 million for land and $10.00 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 $5.16 million, $2.48 million above book value. The farm is expected to produce revenue of $2.09 million each year, and annual cash flow from operations equals $1.97 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

 

acceptedrejected

.

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 13.5 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

4,600

7,000

 

2

4,200

7,000

 

3

3,800

7,000

 

4

3,400

7,000

 

5

3,000

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:

NPV 0 = $

NPV 1 = $

NPV 2 = $

NPV 3 = $

NPV 4 = $

NPV 5 = $

Suggest when should Bell Mountain buy the new accounting system?

Bell Mountain should purchase the system in year 1year 2year 3year 4year 5.

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 13 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 24 percent debt, 6 percent preferred stock, and 70 percent common stock. If the returns required by investors are 11 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

=

 

%

 

testimonials icon
Assignment 4: Compensation Plan Due Week 8 and worth 200 points Select a company for which you would like to w...
testimonials icon
The mariner knows when he passes a person if he or she must hear his tale, and the mariner has no choice but to tell it. Were the mariner a real pe...
testimonials icon
In the first Discussion for this week, you identified and described an underrecognized issue (URI) in public health. This week, you further explore...
testimonials icon
According to Franks and Smallwood (2013), information has become the lifeblood of every business organization, and that an increasing volume of inf...
testimonials icon
 Assignment 1: How Big Global Businesses Compare    Select one (1) global industry, such as the automobile or cell phon...
testimonials icon
1. The graph of h(x) = (x2 - 2) + 1 is the graph of f(x) = x2 shifted how?2. The graph of h(x) = sqrt(x + 2) - 4 i...
testimonials icon
Order Grade A+ Academic Papers Instantly!...
testimonials icon
The British Invasion is basically British bands that go to the United States and revolutionize roc...
testimonials icon
In this assignment, you will be writing a 1,000-1,250-word essay describing the differing approaches of nursing leaders and managers to issues in p...
testimonials icon
300 words. No plagiarism. Find a current crime committed within the past 15 years, a case involving organized crime. Give an example of how...
testimonials icon
You were very pleased with your decis...
testimonials icon
Show ability to use standard professional English in formal written documents.Instructions Familiarize your...

Other samples, services and questions:

Calculate Price

When you use PaperHelp, you save one valuable — TIME

You can spend it for more important things than paper writing.

Approx. price
$65
Order a paper. Study better. Sleep tight. Calculate Price!
Created with Sketch.
Calculate Price
Approx. price
$65