St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $27,000 to $44,000 per year. The new machine will cost $80,000, and it will have an estimated life of 8 years and no salvage value. The new riveting machine is eligible for 100% bonus depreciation at the time of purchase. The applicable corporate tax rate is 25%, and the firm's WACC is 12%. The old machine has been fully depreciated and has no salvage value.

What is the NPV of the project? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent.

Calmex is situated in North India. It specialises in manufacturing overhead water tanks. The management of Calmex has identified a niche market in certain southern cities that need a particular size of water tank not currently manufactured by the company. The company is thus thinking of producing a new type of tank. The survey of company’s marketing department reveals that the company could sell 1,20,000 tanks each year for 6 years at a price of Rs 700 each. The company’s current facilities cannot be used to manufacture new tanks. Thus it will have to buy new machinery. A manufacturer has offered 2 options to the company.
1st option: Buy 4 small machines with the capacity of manufacturing 30,000 tanks each at Rs 15 million each. The machine operation and manufacturing cost of each tank will be Rs 535.
2nd option: Buy 1 large machine with the capacity of 120000 units p.a. for Rs 120 million. The machine operation and manufacturing cost of each tank will be Rs 400.
The company is looking at raising the required capital through a mix of debt, equity and retained earnings in the proportion of 0.5, 0.25 and 0.25 respectively. The company has just declared a dividend of 15% on equity share of face value of Rs 100 each. The expected future growth rate in dividend is 12% p.a. The equity share is currently trading at a price of Rs 168. The bonds of face value Rs 1000 and coupon rate of 16% p.a. is currently trading at Rs 900. Five years remain to maturity and bonds are redeemable at Rs 1100. Assume the applicable tax rate to be 50%. Which option should the company accept? Use alternative techniques of evaluation (NPV, Payback period and Profitability index).

there is no flotation cost in orginal question

Holmes Manufacturing is considering a new machine that costs $285,000 and would reduce pretax manufacturing costs by $90,000 annually. The new machine will be fully depreciated at the time of purchase. Management thinks the machine would have a value of $22,000 at the end of its 5-year operating life. Net operating working capital would increase by $26,000 initially, but it would be recovered at the end of the project's 5-year life. Holmes's marginal tax rate is 25%, and a 12% WACC is appropriate for the project.

1. Calculate the project's NPV. Negative value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest cent.
   $   
   
   Calculate the project's IRR. Do not round intermediate calculations. Round your answer to two decimal places.
     %
   
   Calculate the project's MIRR. Do not round intermediate calculations. Round your answer to two decimal places.
     %
   
   Calculate the project's payback. Do not round intermediate calculations. Round your answer to two decimal places.
     years
2. 
   
3. Assume management is unsure about the $90,000 cost savings-this figure could deviate by as much as plus or minus 20%. What would the NPV be under each of these situations? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.
   20% savings increase: $   
   20% savings decrease: $   
   
4. Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the net operating working capital (NOWC) requirement. She asks you to use the following probabilities and values in the scenario analysis:

   Scenario	Probability	Cost Savings	Salvage Value	NOWC
   Worst case	0.35	$72,000	$17,000	$31,000
   Base case	0.35	$90,000	$22,000	$26,000
   Best case	0.30	$108,000	$27,000	$21,000

   
   Calculate the project's expected NPV, its standard deviation, and its coefficient of variation. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer for expected NPV and for standard deviation to the nearest cent and for coefficient of variation to two decimal places.
   

   E(NPV):	$
   σNPV:	$
   CV:

The Dauten Toy Corporation uses an injection molding machine that was purchased prior to the new tax legislation. This machine is being depreciated on a straight-line basis, and it has 6 years of remaining life. Its current book value is $2,400, and it can be sold for $2,600 at this time. Thus, the annual depreciation expense is $2,400/6 = $400 per year. If the old machine is not replaced, it can be sold for $500 at the end of its useful life.

Dauten is offered a replacement machine which has a cost of $9,000, an estimated useful life of 6 years, and an estimated salvage value of $800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine would permit an output expansion, so sales would rise by $800 per year; even so, the new machine's much greater efficiency would cause operating expenses to decline by $1,000 per year. The new machine would require that inventories be increased by $2,500, but accounts payable would simultaneously increase by $800. Dauten's marginal federal-plus-state tax rate is 25%, and its WACC is 11%.

What is the NPV of the incremental cash flow stream? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent.
$   

The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each project has an initial outflow of $6,750 and has an expected life of 3 years. Annual project cash flows begin 1 year after the initial investment and are subject to the following probability distributions:

BPC has decided to evaluate the riskier project at 11% and the less-risky project at 10%.

1. What is each project's expected annual cash flow? Round your answers to the nearest cent.

   Project A:	$
   Project B:	$

   
   Project B's standard deviation (σ_B) is $5,798 and its coefficient of variation (CV_B) is 0.76. What are the values of (σ_A) and (CV_A)? Do not round intermediate calculations. Round your answer for standard deviation to the nearest cent and for coefficient of variation to two decimal places.

   σA:	$
   CVA:

Peter Gitman is the Senior Relationship Manager at the ABC Wealth Management Company which provides financial planning advisory to high net worth customers. One of his customers Linda Scott told him that she is thinking of giving approximately HKD500,000 to charity to reduce her income taxes. Peter is also the member of the executive committee of the ‘Lovely Home for Seniors’, a charity organization providing services to the elders. The organization is planning its fundraising activity for the year. Peter recommends that the President of the ‘Lovely Home for Seniors’ call on Linda and ask for a donation in similar range.

Comment the action taken by Peter Gitman according to the professional and ethical standards.

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment, and the firm has no excess cash. The firm has total assets of $2.7 million and net plant and equipment equals $2.3 million. It has notes payable of $160,000, long-term debt of $755,000, and total common equity of $1.5 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.

Write out your answers completely. For example, 25 million should be entered as 25,000,000. Negative values, if any, should be indicated by a minus sign. Round your answers to the nearest dollar, if necessary.

1. What is the company's total debt?

   $  

2. What is the amount of total liabilities and equity that appears on the firm's balance sheet?

   $  

3. What is the balance of current assets on the firm's balance sheet?

   $  

4. What is the balance of current liabilities on the firm's balance sheet?

   $  

5. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm's balance sheet.)

   $  

6. What is the firm's net working capital? If your answer is zero, enter "0".

   $  

7. What is the firm's net operating working capital?

   $  

8. What is the monetary difference between your answers to part f and g?

   $  

   What does this difference indicate?

   -Select-The difference indicates Notes payable balance.The difference indicates Accounts payable balance.The difference indicates Current liabilities balance.

A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

1. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

   Project A: $   

   Project B: $   

2. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

   Project A:   %

   Project B:   %

3. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.

   Project A:   %

   Project B:   %

1. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

   Discount Rate	NPV Project A	NPV Project B
   0%	$	$
   5
   10
   12
   15
   18.1
   23.86

2. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

     %

3. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places.

   Project A:   %

   Project B:   %

Your company currently has $ 1,000 ​par, 6.75 % coupon bonds with 10 years to maturity and a price of $ 1,076. If you want to issue new​ 10-year coupon bonds at​ par, what coupon rate do you need to​ set? Assume that for both​ bonds, the next coupon payment is due in exactly six months.

Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other.​ Gateway's discount rate is

10.7 %10.7%.

The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown​ below, which should it​ choose? ​ (Note: dollar amounts are in​ thousands.)

Based on the costs of each​ model, which should it​ choose?  ​(Select the best choice​ below.)

A.

Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.

B.

Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller.

C.

Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller.

D.

Gateway Tours should choose Old Reliable because it lasts longer.

A buyer can afford no more than $500 per month in payments. The most favorable loan available in the market is a 30 year loan at 9%. What is the maximum affordable house with a 20% down payment?

Professor Wendy Smith has been offered the following​ opportunity: A law firm would like to retain her for an upfront payment of

$ 49 comma 000$49,000.

In​ return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment​ arrangement, the firm would pay Professor​ Smith's hourly rate for the eight hours each month. ​ Smith's rate is

$ 540$540

per hour and her opportunity cost of capital is

15 %15%

per year. What does the IRR rule advise regarding the payment​ arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of

15 %15%​.)

What about the NPV​ rule?

You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million):

a. What are the IRRs of the two​ projects?

b. If your discount rate is

5.2 %5.2%​,

what are the

NPVs

of the two​ projects?

c. Why do IRR and NPV rank the two projects​ differently?

a.  A bond that has a ​$1 comma 000 par value​ (face value) and a contract or coupon interest rate of 10.5 percent. Interest payments are ​$52.50 and are paid semiannually. The bonds have a current market value of ​$1 comma 122 and will mature in 10 years. The​ firm's marginal tax rate is 34 percet.

b.  A new common stock issue that paid a ​$1.83 dividend last year. The​ firm's dividends are expected to continue to grow at 7.4 percent per​ year, forever. The price of the​ firm's common stock is now ​$27.35.

c.  A preferred stock that sells for ​$122​, pays a dividend of 8.1 ​percent, and has a​ $100 par value.  

d.  A bond selling to yield 11.7 percent where the​ firm's tax rate is 34 percent.