Question

In: Finance

Using the information from problem 16 on Large Manufacturing, Inc., what is the Year 1 Net...

Using the information from problem 16 on Large Manufacturing, Inc., what is the Year 1

Net Operating Cash Flow? Enter your answer rounded to two decimal places. Do not

enter $ or comma in the answer box. For example, if your answer is $12,300.456 then

enter as 12300.46 in the answer box.

Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and it will have a positive pre-tax salvage value at the end of Year 3, when the project will be closed down. Also, some new working capital will be required, but it will be recovered at the end of the project's life. Revenues and cash operating costs are expected to be constant over the project's 3-year life. What is the project's Initial Cash Outlay at time 0? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.



WACC





11.0%



Net investment in fixed assets (depreciable basis)

$70,000



Required new working capital


$10,000



Sales revenues, each year



$95,000



Cash operating costs excl. depr'n, each year

$30,000



Expected pretax salvage value


$9,000



Tax rate





30.0%

Solutions

Expert Solution


Related Solutions

Using the information from problem 16 on Large Manufacturing, Inc., what is the project’s NPV? Enter...
Using the information from problem 16 on Large Manufacturing, Inc., what is the project’s NPV? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and...
Problem 16-1 The stockholders’ equity section of Blossom Inc. at the beginning of the current year...
Problem 16-1 The stockholders’ equity section of Blossom Inc. at the beginning of the current year appears below. Common stock, $10 par value, authorized 911,000 shares, 309,000 shares issued and outstanding $3,090,000 Paid-in capital in excess of par—common stock 646,000 Retained earnings 604,000 During the current year, the following transactions occurred. 1. The company issued to the stockholders 102,000 rights. Ten rights are needed to buy one share of stock at $35. The rights were void after 30 days. The...
Problem 16-21 Using net present value and payback period to evaluate investment opportunities LO 16-2, 16-4...
Problem 16-21 Using net present value and payback period to evaluate investment opportunities LO 16-2, 16-4 Daryl Kearns saved $240,000 during the 30 years that he worked for a major corporation. Now he has retired at the age of 60 and has begun to draw a comfortable pension check every month. He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an initial payment of...
Using the information from problem 8 on Alpha & Omega, what is the NPV (on a...
Using the information from problem 8 on Alpha & Omega, what is the NPV (on a 6-year extended basis) of System B? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box. Alpha & Omega wants to invest in a new computer system, and management has narrowed the choice to Systems A and B. System A requires...
16-Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The...
16-Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and it will have a positive pre-tax salvage value at the end of Year 3, when the project will be closed down. Also, some new working capital will be required, but it will be recovered at the end of the project's life. Revenues and cash operating costs are expected...
The following information was taken from the books and records of Wildhorse, Inc.: 1. Net Income...
The following information was taken from the books and records of Wildhorse, Inc.: 1. Net Income $360,000 2. Capital structure: a. Convertible 6% bonds. Each of the 330, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 330,000 b. $10 par common stock, 180,000 shares issued and outstanding during the entire year. 1,800,000 c. Stock warrants outstanding to buy 15,840 shares of common stock at $20 per share. 3....
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of June, 2016 are as follows. Production data Units Percent Complete Work in process units, June 1 2,600 61% Units started into production 6,285 Work in process units, June 30 3,000 38% Cost data Work in process, June 1...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of June, 2016 are as follows. Production data Units Percent Complete Work in process units, June 1 2,600 61% Units started into production 6,285 Work in process units, June 30 3,000 38% Cost data Work in process, June 1...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of June, 2016 are as follows. Production data Units Percent Complete Work in process units, June 1 2,600 61% Units started into production 6,285 Work in process units, June 30 3,000 38% Cost data Work in process, June 1...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures...
Consider the following information from Manufacturing Inc., then see the instructions that follow. Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of June, 2016 are as follows. Production data Units Percent Complete Work in process units, June 1 2,600 61% Units started into production 6,285 Work in process units, June 30 3,000 38% Cost data Work in process, June 1...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT