Based on the information provided below, Should the company proceed with the investment? Use NPV & IRR to evaluate the project.                                                                                                    

                                                                                    Old Machine            Proposed new Machine

Asset cost                                                                     $150,000            $180,000

Age of machine                                                             10 years            0 years

Useful Life                                                                   15 years            5 years

Salvage value                                                                $15,000            0

Revenue                                                                       $500,000            $550,000

Maintenance cost                                                          $6,000                   $10,000

Electricity cost                                                              $20,000             $25,000

Shipping cost                                                                -                       $6,000

Freight insurance                                                          -                       $2,000

Installation & Commissioning expense                           -                       $12,000

Working capital:

Cash                                                                             $15,000             $25,000

Trade debtors                                                                $30,000             $40,000

Inventory                                                                      $24,000             $34,000

Trade creditors                                                              $40,000             $50,000

Accruals                                                                       $10,000             $15,000

Current portion of long-term Loan                                  $8,919             $15,977

Long-term Loan (non-current portion)                            $46,435             $84,022

Interest rate                                                                     10.75%            11.25%

Interest Expense                                                            $7,539             $11,250

Instalment payment                                                       $16,458             $27,227

Depreciation is on straight-line method. The current machine can be sold today for $75,000. The new machine can reduce labour by cutting cost from $36,000 to $30,000 a year. The estimated selling price of the new machine at the end of its useful life is $35,000. Should company proceed with the replacement, they have to use their other factory lot now leased to a third party for $700 per month. The company spent $30,000 on rewiring/renovation of the factory now leased to the third party. It is expected that only 90% of company’s investment in working capital will be recovered. Company’s tax rate is 40% and its WACC is 11.00%

The Comic Book Publication Group (CBPG) specializes in creating, illustrating, writing, and printing various publications. It is a small but publicly traded corporation. CBPG currently has a capital structure of $12 million in bonds that pay a 5% coupon, $5 million in preferred stock with a par value of $35 per share and an annual dividend of $1.75 per share. The company has common stock with a book value of $6 million. The cost of capital associated with the common stock is 10%. The marginal tax rate for the firm is 33%.

The management of the company wishes to acquire additional capital for operations purposes. The chief executive officer (CEO) and chief financial officer (CFO) agree that another public debt offering (corporate bonds) in the amount of $10 million would suffice. They believe that due to favorable interest rates, the company could issue the bonds at par with a 4% coupon.

Before the Board of Directors convenes to discuss the debt Initial Public Offering (IPO), the CFO wants to provide some data for the board of directors’ meeting notebooks. One point of the analysis is to evaluate the debt offering’s impact on the company’s cost of capital. To do this:

• Solve for the current cost of capital of CBPG on a weighted average basis
• Solve for the new cost of capital, assuming the $10 million bond issued at par with a 4% coupon.
• Describe how you approached these calculations. Also discuss the tax shield advantage that debt capital provides, and briefly explain the cost of capital and WACC
• Provide a Table(s) to present answers (Students can transfer their EXCEL Table if utilized)

Summarize findings

Superior papers will explain the following elements when responding to the assignment questions:

• Provide narrative and solve for the current cost of capital of CBPG on a weighted average basis (WACC)
• Provide narrative and solve for the new cost of capital (WACC)
• Provide accurate WACC calculations for both scenarios
• Provide a Table(s) to present answers (there is a difference between performing calculations and presenting the supporting data and solved answers)
• Provide narrative on tax shield implications for both scenarios
• Provide narrative briefly explaining the cost of capital and WACC
• Provide a clear, logical conclusion

What text or resources will be good to use for MBA 560 Financial and Managerial Accounting? I am looking for resources that will help me with the mathematical portion for my upcoming class.

write a short note on the following financial axioms

Write a short note on the following Financial Management Axioms:

a)  Risk – return trade-off
b)  Cash is King.

c)  Incremental Cash flows count
d)  The agency problem

e)  Ethical decisions are everywhere in Finance

f)Efficient Capital markets.

how important is the distance ( to final and source markets ) is to businesses operating internationally today? (500 words essay)

         Adam Smith is often called the father of economics. His famous book, The Wealth of Nations, talks about an “invisible hand” that automatically allocates goods to the persons best able to put them to good use. The invisible hand operates through the price mechanism for goods and services, so that individuals who trade on the market, while seeking only their own good, actually allocate society’s resources efficiently.

Applied to modern capital markets, his ideas would imply that these markets would efficiently allocate investment capital to the firms that would use them most efficiently in producing goods and services for society—but only if they were left to operate without state intervention.

What benefits would be created if modern governments reduced financial regulations substantially in accordance with Smith’s thinking? From an ethical perspective, what societal costs might be created?

1) Lucy wants to buy a house. The house costs $825,000. She will make a 20% down payment. She will have a 30-year mortgage at an interest rate of 5%.

a) Make an amortization schedule for the first 6 payments (not years) of her loan. Make sure your amortization table has the following columns (in this order): beginning balance, payment, interest, principal reduction, and ending balance. (Make sure you round to the nearest cent, not dollar!)

b) Assuming she follows her amortization schedule, what will be the total interest she will pay for her home after 30 years? Show calculations.

2) Lucy wants to retire comfortably. She wants to have 10 million dollars by the time she retires in 30 years.

a. How much money does Lucy need in her account today in order to have 10 million dollars in 30 years? She can earn 6% interest, compounded annually.

b. If Lucy were to make year-end payments to her account for the next 30 years, what would her payment amount have to be in order to have the 10 million dollars in 30 years, @ 6% interest, compounded annually?

3) Mary makes $16,000 a month (gross). She is married and claims 5 exemptions. Her state income tax withholding is 5%. (Use the text’s limit for social security, for parts a-c.)

a. What is Mary’s net pay for January? (After ALL taxes and withholdings…don’t forget SS, Med., FIT…) Show each tax/withholding amount (list Gross, then list each tax subtracted out to get net pay).

b. What is Mary’s net pay for September? (Not cumulative, JUST September’s net pay.)

c. What are Mary’s total taxes paid/withheld for the year? (Specify amounts for each tax.)

d. What is the current year’s income limit (base) for social security and maximum social security tax payable (in dollar amount)?

4) Pick two companies and track their stocks for three trading days (not weekends or holidays). You can find their stock information on the internet or in a newspaper. Tell me: the company’s name, their symbol, what stock market they are trading on, their high and low for the past year, what their dividend per share was last year, their closing price each day and what their price earnings ratio was for those days (show the calculation).

5) Find the consolidated financial statements for Garmin Ltd and Subsidiaries for the year ended December 29, 2018 and compute the following ratios: current ratio, debt to assets ratio, and return on equity ratio. (Form 10-K, search online). Show your calculations to earn credit. What might these ratio’s show about this company?

6) Pick two “Personal Finance, A Kiplinger Approach” or My Money articles from the textbook. (They are at the end of each chapter.) For each article you pick, write a one to two paragraph summary of the article and another paragraph on your thoughts/opinion/insights and items learned from reading the article. Indicate page number and which chapter the article is from.

You are evaluating a project for your company. You estimate the sales price to be $300 per unit and sales volume to be 4,000 units in year 1; 5,000 units in year 2; and 3,500 units in year 3. The project has a three-year life. Variable costs amount to $150 per unit and fixed costs are $200,000 per year. The project requires an initial investment of $231,000 in assets which will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $40,000. NWC requirements at the beginning of each year will be approximately 10 percent of the projected sales during the coming year. The tax rate is 30 percent and the required return on the project is 10 percent. What is the operating cash flow for the project in year 2?

What do you think is a better method for a company to add another company merge or acquisition and why?

The case states that Space-Age’s optimal capital structure calls for 20 percent long-term debt and 80 percent common equity. However, according to the 1992 balance sheet, the firm’s capitalization ratio is Long-term debt/Total permanent capital = $12,570,000/($12,570,000 + $17,490,000 + 11,310,000) = 0.304 = 30.4 percent, and its total-debt-to-total-assets ratio is $15,540,000/$44,340,000 = 35.1 percent. Do these figures indicate that the capital structure is seriously out of balance, that the company is using far too much debt, and that you should modify the mix of debt and equity used in the forecasts? (Hint: Think about whether the optimal capital structure should be stated in book value or market value terms.)

1)

Depreciation for a profitable firm

A: decreases both operating and net income.

B: increases the net fixed assets as shown on the balance sheet.

C: reduces both the net fixed assets and the costs of a firm.

D: is a non-cash expense which increases the net operating income.

E: decreases net fixed assets, net income, and operating cash flows.

2) For a growing firm, the change in net working capital is generally:

A: positive.

B: negative.

C: highly erratic.

D: highly negative.

E: equal to zero.

3)The accounting statement of cash flows consists of the cash flows from:

A: operations, investing activities, and financing activities.

B: operations, investing activities, and divesting activities.

C: internal activities, external activities, and financing activities.

D: balance sheet accounts only.

E: income statement accounts only.

4) Total equity is $1,620, fixed assets are $1,810, long-term debt is $650, and short-term debt is $300. What is the amount of current assets?

A: $760

B: $360

C: $1,140

D: $480

E: $790

5) Brewster Mills has total revenues of $684,350, costs of goods sold of $472,500, net income of $11,520, and average inventory of $91,600. What is the days' sales in inventory?

A: 69.84 days

B: 70.76 days

C: 71.51 days

D: 5.16 days

E: 4.08 days

6) Using the internal rate of return method, a conventional investment project should be accepted if the internal rate of return is:

A: equal to, and only if it is equal to, the discount rate.

B: equal to or greater than the discount rate.

C: less than the discount rate.

D: negative.

E: positive.

Consider a firm whose only asset is a plot of vacant land, and whose only liability is debt of $15 million due in one year. If left vacant, the land will be worth $10 million in one year. Alternatively, the firm can develop the land at an upfront cost of $20 million. The developed land will be worth $35 million in one year. Suppose the risk-free interest rate is 10%, assume all cash flows are risk-free, and assume there are no taxes.

a) If the firm chooses not to develop the land, what is the value of the firm’s equity today? What is the value of the debt today?

b) What is the NPV of developing the land?

c) Suppose the firm raises $20 million from equity holders to develop the land. If the firm develops the land, what is the value of the firm’s equity today? What is the value of the firm’s debt today?

Please can you explain how you got your answer, thank you :)

Suppose A Company accepts all projects with payback periods less than 3 years. State which project(s) the company should undertake based on this policy and determine the total NPV from following this policy.