McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $950 per set and have a variable cost of $425 per set. The company has spent $145,000 for a marketing study that determined the company will sell 48,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,000 sets of its high-priced clubs. The high-priced clubs sell at $1,450 and have variable costs of $580. The company also will increase sales of its cheap clubs by 11,600 sets. The cheap clubs sell for $425 and have variable costs of $155 per set. The fixed costs each year will be $9,400,000. The company has also spent $1,050,000 on research and development for the new clubs. The plant and equipment required will cost $29,400,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will require an increase in net working capital of $2,380,000 that will be returned at the end of the project. The tax rate is 22 percent and the cost of capital is 14 percent. Suppose you feel that the values are accurate to within only ±10 percent. What are the best-case and worst-case NPVs? (Hint: The price and variable costs for the two existing sets of clubs are known with certainty; only the sales gained or lost are uncertain.) (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
In: Finance
With the advancements made in technology we all use some form of it daily. Whether we are using a computer, smartphone, the internet and social media, etc., these things have been incorporated into our daily living. Most people are required to use some form of technology at work, we are entertained with them and it is the most used form of communication. With that technology and the internet have been very important for companies for the purpose of working, communicating, and even advertising. "Using social media for business marketing has been a hot topic for years now, but brands are still trying to harness the power of the digital socialsphere to discover the best ways to directly impact their bottom lines. As social media use advances, so does the frequency in which brands are reaching out to their audiences to engage them through these channels" (Gleeson, n.d.).
The use of social media for a company can have both negative and positive benefits, however the use of social media can create substantial benefits for a company when communicating both internally and externally. Social media can be a tool to facilitate faster and better change management decisions to accelerate and promote internal changes. A company can build trust internally through social media by promoting the positive actions of their employees and progress in their work. By promoting their employee on social media the company can build trust and motivation within the company. By making an employee feel valued in their job they will be better motivated to perform better in the future.
A company can build trust externally by listening to and responding to their customer complaints and suggestions. By responding to their customers in a timely manner the company will gain the trust and loyalty of a valuable customer. "When social media are used for professional purposes, teams can communicate more efficiently; companies can interface more responsively with customers, clients, and suppliers; customers and other interested individuals can be directly involved in the development of products and services; and anyone with shared professional interests can communicate easily, not needing to travel to see one another" (Cardon, 2017).
Social media is also a great tool to address many public relations issues that might arise. If the company has an issue arise or there is bad news for the company that leaks out the company should already have a policy to handle it. Within this policy or plan the company should be able to identify the issue before trying to solve it. The company needs to make sure that the information is accurate when it is presented to make the company look its best.
Social media can also be to support the culture, strategic vision, values, and mission of the company. This information can be created for the company and then placed on its social media platform for potential customer, investors, and employees to see and make their decision about the company based on the facts of the company. Companies could gain from this tactic since social media is in real time and can be shared and viewed by many people quickly.
Required
Give examples of organizations that have used social media effectively in the ways your peers described. Why do you believe the organizations effectively communicated the intended messages from the perspectives of the target audiences?
In: Finance
McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,070 per set and have a variable cost of $485 per set. The company has spent $175,000 for a marketing study that determined the company will sell 54,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,200 sets of its high-priced clubs. The high-priced clubs sell at $1,570 and have variable costs of $700. The company also will increase sales of its cheap clubs by 12,800 sets. The cheap clubs sell for $485 and have variable costs of $215 per set. The fixed costs each year will be $10,000,000. The company has also spent $1,350,000 on research and development for the new clubs. The plant and equipment required will cost $33,600,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will require an increase in net working capital of $2,740,000 that will be returned at the end of the project. The tax rate is 24 percent and the cost of capital is 14 percent. Calculate the payback period. (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
In: Finance
McGilla Golf is evaluating a new golf club. The clubs will sell for $960 per set and have a variable cost of $430 per set. The company has spent $147,500 for a marketing study that determined the company will sell 48,500 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,100 sets of its high-priced clubs. The high-priced clubs sell at $1,460 and have variable costs of $590. The company also will increase sales of its cheap clubs by 11,700 sets. The cheap clubs sell for $430 and have variable costs of $160 per set. The fixed costs each year will be $9,450,000. The company has also spent $1,075,000 on research and development for the new clubs. The plant and equipment required will cost $29,750,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will also require an increase in net working capital of $2,410,000 that will be returned at the end of the project. The tax rate is 23 percent and the cost of capital is 15 percent. What is the senstivity of the NPV to changes in the price and quantity sold of the new clubs? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
In: Finance
An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, and a discount rate of 13 percent. |
a. |
What is the discounted payback period for these cash flows if the initial cost is $6,400? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What is the discounted payback period for these cash flows if the initial cost is $8,500? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
c. | What is the discounted payback period for these cash flows if the initial cost is $11,500? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
In: Finance
A three-month t bill sold for a price of $99.311998 per $100 face value. What is the yield to maturity of this bond expressed as an Effective Annual Rate (as opposed to the Nominal Rate Rate)? Remember, the bond matures in 3 months, meaning C/Y = 4. First compute nominal rate and then figure out effective rate. Ok to solve with Excel
a |
2.5% |
|
b |
2.8% |
|
c |
3.2% |
|
d |
4.0% |
In: Finance
Payments on a $10000 loan are made quarterly in arrears (that is, at the end of each quarter) for 10 years. The annual effective rate of interest is 7%. Find the principal outstanding after the 6th payment, and the amount of principal in the 14th payment (using the amortization method in both cases).
In: Finance
You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $1,350 a month in a stock account in real dollars and $560 a month in a bond account in real dollars. The effective annual return of the stock account is expected to be 13 percent and the bond account will earn 6 percent. When you retire, you will combine your money into an account with an effective annual return of 8 percent. The inflation rate over this period is expected to be an effective annual rate of 3 percent. |
a. |
How much can you withdraw each month from your account in real terms assuming a withdrawal period of 25 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|
b. |
What is the nominal dollar amount of your last withdrawal? (Do not round intermediate calculations and
|
In: Finance
Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 25%. At year-end, it had $14 million in operating current assets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant and equipment. Assume Miami Rivet has no excess cash. Miami Rivet uses only debt and common equity to fund its operations. (In other words, Miami Rivet has no preferred stock on its balance sheet.) Miami Rivet had no other current liabilities. Assume that Miami Rivet only noncash item was depreciation. Miami Rivet has 500,000 common shares outstanding, and the common stock amount on the balance sheet is $5 million. The company has not issued or repurchased common stock during the year. Last year’s balance in retained earnings was $11.2 million, and the firm paid out dividends of $1.8 million during the year. If the firm’s stock price at year-end is $52, what is the firm’s market value added (MVA)? If the firm’s after-tax percentage cost of capital is 9%, what is the firm’s Long-term debt at year-end? If the firm’s after-tax percentage cost of capital is 9%, what is the firm’s EVA at year-end?
I only need question about EVA Answered please!!! THank you!!!
In: Finance
Consider a bond that pays annually an 8% coupon with 20 years to maturity. The percentage change in the price of the bond if its yield to maturity increases from 5% to 7% is closest to? Set your decimal places to 4 in your financial calculator.
a |
19.50% |
|
b |
24.22% |
|
c |
-24.22% |
|
d |
-19.50% |
In: Finance
Please, I need it with 40 minutes if you can post it. thanks
Machine A costs $37,000 to purchase and is worth $8,000 in 5 years at the end of its service life. Machine B costs $20,000 to purchase and is worth $1,000 in 4 years at the end of its service life. Assume that these machines are needed for 20 years (required service period). Each machine can be repurchased at the same price in the future, and assume the annual maintenance cost of each machine is negligible. Use 8% annual interest rate. What is the Present Total Cost of the machine that should be purchased? Enter your answer as a positive number."
In: Finance
Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year’s capital budget. The projects are independent. The cash outlay for the truck is $17,100 and that for the pulley system is $22,430. The firm’s cost of capital is 14%. After-tax cash flows, including depreciation, are as follows:
Year Truck Pulley
1 $5,100 $7,500
2 5,100 7,500
3 5,100 7,500
4 5,100 7,500
5 5,100 7,500
Calculate the IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.
Truck: ?? %
What is the correct accept/reject decision for this project?
Based on the IRR, this project should be [Accepted, Reject]
Pulley: ?? %
What is the correct accept/reject decision for this
project?
Based on the IRR, this project should be [Accepted,
Reject].
Calculate the NPV for each project. Do not round intermediate calculations. Round your answers to the nearest dollar. Use a minus sign to enter negative values, if any.
Truck: ?? %
What is the correct accept/reject decision for this
project?
Based on the NPV, this project should be [Accepted,
Reject].
Pulley: $ ?? %
What is the correct accept/reject decision for this
project?
Based on the NPV, this project should be [Accepted,
Reject].
Calculate the MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.
Truck: ?? %
What is the correct accept/reject decision for this project?
Based on the MIRR, this project should be [Accepted,
Reject].
Pulley: ?? %
What is the correct accept/reject decision for this project?
Based on the MIRR, this project should
be [Accepted, Reject].
After failing multiple attempts to do this myself, I resorted to using Chegg to help me get the answer and explain it. Thank you to whoever spends their time working it out for me.
In: Finance
JS: Capital budgeting JS company is considering an investment that requires an outlay of $100,000 today. Cash inflow from the investment are expected to be $10,000 for year 1-3, and $40,000 for year 4, 5, 6, 7, and 8. You require a 20% rate of return on this type of investment. Answer the following questions: First draw the time line and specify the cash outflow and inflow for each period. Calculate the net present value. Calculate the Internal rate of return of this investment. Calculate the payback periods Shall the investment be undertaken?
Please report the answer in the following multiple choices.
a. Discoutn rate 0.20 year cash flow 0 ?? 1 ?? 2 ?? 3 ?? 4 ?? 5 ?? 6 ?? 7 ?? 8 ??
b. pv of cash flow since yr 1 ??
c. npv ??
d. IRR ??
e. payback perioe ??
f. accept the project - yes or no? ??
In: Finance
Your division is considering two investment projects, each of which requires an up-front expenditure of $17 million. You estimate that the investments will produce the following net cash flows:
Year | Project A | Project B |
1 | $ 5,000,000 | $20,000,000 |
2 | 10,000,000 | 10,000,000 |
3 | 20,000,000 | 7,000,000 |
What are the two projects' net present values, assuming the cost
of capital is 5%? Round your answers to the nearest dollar.
Project A $ ??
Project B $ ??
What are the two projects' net present values, assuming the cost of
capital is 10%? Round your answers to the nearest dollar.
Project A $ ??
Project B $ ??
What are the two projects' net present values, assuming the cost of
capital is 15%? Round your answers to the nearest dollar.
Project A $ ??
Project B $ ??
What are the two projects' IRRs at these same costs of capital?
Round your answers to two decimal places.
Project A ?? %
Project B ?? %
In: Finance
Mr tan is considering 2 potential investment projects that have similar capital requirements:
Year 0 | year 1 | year 2 | year 3 | year 4 | |
project A | 4,000,000 | 1,600,000 | 1,800,000 | 2,000,000 | 2,100,000 |
Project B | 4,200,000 | 500,000 | 1,700,000 | 1,900,000 | 2,000,000 |
For project A,the company cost of capital is 14%.For project B,assessed as the riskier project of the two.,a risk adjusted cost of capital of 15% is considered appropriate.
1) calculate the NPV of the 2 projects and assess the projects using the investment appraisal technique of Net present Vale.
2)Calculate the IRR of the 2 projects and assess the projects using the investment appraisal technique of Internal rate of return.
3) Is the company cost of capital suitable in the evaluation of projects with different risks? Explain
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