New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $870,000, and it would cost another $25,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $699,000. The machine would require an increase in net working capital (inventory) of $16,500. The sprayer would not change revenues, but it is expected to save the firm $376,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%.

a. What is the Year 0 net cash flow?
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b. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

c. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.
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d. If the project's cost of capital is 15 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
$

Should the machine be purchased?
-Select-Yes OR No

Net Salvage Value

Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $25 million, of which 80% has been depreciated. The used equipment can be sold today for $7.5 million, and its tax rate is 30%. What is the equipment's after-tax net salvage value? Write out your answer completely. For example, 2 million should be entered as 2,000,000.

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3. Consider the following semiannual bond: Coupon rate = 6.5% Maturity = 20 years Par value = $1,000 Market price = $1,035 Can be called in 8 years at $1,032.5 Can be called in 15 years at par Only put date in 8 years and putable at par value (1) What is the yield to maturity for this bond? (1 point) (2) What is the yield to first call? (1 point) (3) What is the yield to second call? (1 point) (4) What is the yield to worst for this bond? (2 points)

A company has just paid a dividend of $ 2 per share, D0=$ 2 . It is estimated that the company's dividend will grow at a rate of 18 % percent per year for the next 2 years, then the dividend will grow at a constant rate of 7 % thereafter. The company's stock has a beta equal to 1.4, the risk-free rate is 4.5 percent, and the market risk premium is 4 percent. What is your estimate of the stock's current price? Round your answer to two decimal places.

Columbus Manufacturing's stock currently sells for $ 24.32 a share. The stock just paid a dividend of $2 a share (i.e.,D0=2). The dividend is expected to grow at a constant rate of 3 % a year. What is the required rate of return on the company's stock? Express your answer in percentage, and round it to two decimal places, i.e., 13.54, for example for 0.1354)

Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decrease from 25 to 20 percent. a. What is the bond price at 25 percent? b. What is the bond price at 20 percent? c. What would be your percentage return on the investment if you bought when rates were 25 percent and sold when rates were 20 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 150,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost $1,900,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $160,000. Your fixed production costs will be $275,000 per year, and your variable production costs should be $10.40 per carton. You also need an initial investment in net working capital of $140,000. The tax rate is 25 percent and you require a return of 12 percent on your investment. Assume that the price per carton is $17.00. a. Calculate the project NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the minimum number of cartons per year that can be supplied and still break even? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c. What is the highest fixed costs that could be incurred and still break even? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 156,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost $1,960,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $166,000. Your fixed production costs will be $281,000 per year, and your variable production costs should be $11.00 per carton. You also need an initial investment in net working capital of $146,000. The tax rate is 21 percent and you require a return of 10 percent on your investment. Assume that the price per carton is $17.60. a. Calculate the project NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the minimum number of cartons per year that can be supplied and still break even? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c. What is the highest fixed costs that could be incurred and still break even? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 85 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 27% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 6%.

Calculate the utility levels of each portfolio for an investor with A = 2. Assume the utility function is U = E(r) − 0.5 × Aσ².

A firm is considering an investment in a new machine with a price of $17.2 million to replace its existing machine. The current machine has a book value of $6.8 million and a market value of $5.5 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $7.0 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine, it will also need an investment of $390,000 in net working capital. The required return on the investment is 10 percent and the tax rate is 24 percent. The company uses straight-line depreciation. What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89.) What is the IRR of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the NPV of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89.) What is the IRR of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. )

Select two public companies in the same industry, obtain their most recent published financial statements, and perform financial ratio analysis for both. Write a report to summarize your findings and conclusion. Your report should include:

1. Balance sheet ratio analysis
2. Income statement ratio analysis
3. Statement of cash flow ratio analysis
4. Credit rating of both companies by Standard & Poor’s and Moody’s
5. Ratio comparative analysis
6. Clear conclusion and opinion about which company you prefer to invest in, and why.

What are the knowledge important for hotel business (Customer, supplier, administrator)(Small hotels like darwin city hotel)? How they use these knowledge? Develop a KMS framework for the business

Simone runs a small business and receives an invoice for $1000 payable in 30 days. The invoice offers a discount of 2% for immediate payment. If Simone doesn’t pay immediately and instead pays in 30 days, what effective annual interest rate is she paying?