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Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: |
| Year | Unit Sales | |||
| 1 | 72,600 | |||
| 2 | 78,000 | |||
| 3 | 83,000 | |||
| 4 | 80,900 | |||
| 5 | 67,100 | |||
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Production of the implants will require $1,420,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $3,500,000 per year, variable production costs are $137 per unit, and the units are priced at $319 each. The equipment needed to begin production has an installed cost of $17,900,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. The company is in the 22 percent marginal tax bracket and has a required return on all its projects of 16 percent. MACRS schedule. |
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What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
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What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
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Amazing Manufacturing, Inc., has been considering the purchase of a new manufacturing facility for $490,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value at that time. Operating revenues from the facility are expected to be $385,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 5 percent. Production costs at the end of the first year will be $230,000, in nominal terms, and they are expected to increase at 6 percent per year. The real discount rate is 8 percent. The corporate tax rate is 25 percent. |
| Calculate the NPV of the project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
In: Finance
I need an to check my answer with 4 decimal places:
Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact it can be sold after 6 years for $682,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year’s forecast sales. The firm estimates production costs equal to $1.30 per trap and believes that the traps can be sold for $5 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, and the required rate of return on the project is 8%.
a. What is project NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 4 decimal places.)
b. By how much would NPV increase if the firm
depreciated its investment using the 5-year MACRS schedule?
(Do not round intermediate calculations. Enter your answer
in whole dollars not in millions.)
Use the MACRS depreciation schedule.
| Year: | 0 | 1 | 2 | 3 | 4 | 5 | 6 | Thereafter |
| Sales (millions of traps) | 0 | 0.5 | 0.7 | 0.8 | 0.8 | 0.7 | 0.5 |
0 |
In: Finance
a) Calculate the monthly installments
b) Build an amortization table for the life of loan. For each payment, show the beginning loan balance, interest payment, principal payment, and ending balance.
In: Finance
After years of playing the lottery, you just won $10,000,000.
Now, you have to figure out how you want it paid to you. You can
take a lump sum now before tax, (yes, Uncle Sam will eventually get
his part), or you can take annual payments at the end of each year
(also before tax). The interest rate is 4% and if you do take the
payments, they will be paid over 20 years.
1) What is the lump sum payment that you would receive today?
2) How much would you have received in total at the end of the 20
years if you took the payments?
In: Finance
Calculating Rates of Return [LO3]
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A coin sold at auction in 2017 for $2,897,000. The coin had a face value of $10 when it was issued in 1795 and had previously been sold for $310,000 in 1970. |
| a. |
At what annual rate did the coin appreciate from its first minting to the 1970 sale? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b. | What annual rate did the 1970 buyer earn on his purchase? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| c. | At what annual rate did the coin appreciate from its first minting to the 2017 sale? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
(Calculating corporate income tax) Last year the commercial real estate firm Kelly and Co., Inc., earned taxable income of $19 million. Calculate Kelly’s federal income taxes. Now calculate Kelly’s average and marginal tax rates.
In: Finance
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A 7.10 percent coupon bond with 21 years left to maturity is priced to offer a 5.2 percent yield to maturity. You believe that in one year, the yield to maturity will be 5.7 percent. |
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What would be the total return of the bond in dollars? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
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What would be the total return of the bond in percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
In: Finance
Identify and describe two incremental cash flows for project such as expanding a product line or launching a new product or service.
Need 300b words discussion
In: Finance
You discover that the client's previous tax returns from last year, which someone else prepared, listed a deduction of $3,000 in excess of the actual expenditure. This mistake was not intention and the IRS will probably not detect the error. You can change the error, which might cost the client additional liability. Another option would be to prepare the return from the previous year so that the mistake was yours. Create a price structure for each option. Indicate to the client that you want to meet to discuss these options.
For this assignment, feel free to add any additional information that you feel the client would want to know about each option (this can come from your own experiences, knowledge from other courses, etc). You can be creative with some of the information in the memo, such as name, date, etc.
In: Finance
(CO B) Ms. Towne is buying a home for $250,000 and is putting down 20% cash on the purchase. She is financing the rest with a 30-year, fixed rate mortgage with a rate of 4.625% but is considering an option that would allow her to make biweekly payments. How much interest would the biweekly payment option allow her to save over the life of the loan and how long would it take to pay off the loan?
In: Finance
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 80% loan for 25 years at 8% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 2 points. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money?
In: Finance
10-year corporate bond has a coupon rate of 6% with semi-annual payments. If interest rates rise to 7% on similar bonds then what is the value of the bond in the marketplace?
A 10-year corporate bond has a coupon rate of 6% with semi-annual payments. If interest rates rise to 5% on similar bonds then what is the value of the bond in the marketplace?
A 10-year corporate bond has a coupon rate of 6% with annual payments. If the current value of the bond in the marketplace is $900, then what is the Yield-to-Maturity (YTM)?
A 10-year corporate bond has a coupon rate of 6% with annual payments. If the current value of the bond in the marketplace is $1100, then what is the Yield-to-Maturity (YTM)?
In: Finance
Balance Sheet Analysis
Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:
Total assets turnover: 1.3
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales =
23%
Total liabilities-to-assets ratio: 55%
Quick ratio: 1.25
Days sales outstanding (based on 365-day year): 33 days
Inventory turnover ratio: 6.0
Round your answers to the nearest whole dollar.
| Partial Income | Statement Information |
| Sales | $ |
| Cost of goods sold | $ |
Balance Sheet
| Cash | $ | Accounts payable | $ |
| Accounts receivable | $ | Long-term debt | $ 50,000 |
| Inventories | $ | Common stock | $ |
| Fixed assets | $ | Retained earnings | $ 100,000 |
| Total assets | $ 400,000 | Total liabilities and equity | $ |
In: Finance
In: Finance